Investopedia: The Bizarre Merger Of Jefferies And Leucadia

Mergers and Acquisitions (M&A) play a large role in business today. While many recent merger/acquisitions announcements have made quite a bit of sense for both parties, Monday's announcement that Leucadia (NYSE:LUK) will acquire the remainder of mid-tier investment bank Jefferies (NYSE:JEF) breaks that mold. Although this deal brings some fairly clear benefits for Jefferies, I'm not really sure that Leucadia shareholders should be celebrating this deal.

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U.S. Bancorp Worth Checking Out

The banking sector is still a big hot mess. Banks are still going under every Friday and good news usually consists of things getting less-bad. In this sort of environment, banks that were not very well run going into the crisis are looking better than the best-run banks ... mostly just because that recovery from "bad to less-bad" is much more pronounced for them. 

With that in mind, I would not expect any huzzahs and handsprings over the results posted by U.S. Bancorp (NYSE:USB) on Tuesday morning. Yes, USB is still one of the best-run large banks in the country and its conservative lending policies and diverse income streams will serve it well as loan demand rebounds. But all of that is already known by the market and the quarter-to-quarter improvements from bank companies like USB just do not look as impressive when stacked up against the likes of Zions Bancorp (Nasdaq: ZION), Popular (Nasdaq: BPOP) or TCF Financial (NYSE:TCB).

A Good Quarter All the Same 

U.S. Bancorp's first quarter may not meet the standards for "great," but it was no worse than good enough. On an operating basis, the company did beat expectations, though not by much. Revenue slipped almost 4% from the fourth quarter, largely because of a sizable drop in fee income. Net interest income performance was alright - net interest margin fell (due to deposit growth), but earning assets grew and loan growth was up a bit as well.

USB saw much lower provisioning this quarter, falling 17% from the fourth quarter and more than 40% from the year-ago level. Within the balance sheet, NPLs were basically flat, though total non-performing assets (minus covered loans) did increase about 4% on a sequential basis. Expense control was also solid, as expenses fell about 7% on a sequential basis.

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