Last week, an audit by the TARP program's government watchdog suggested that a wide majority (83%) of banks that have received TARP investments had, in fact, put some of the funds to work by lending them out. That may well be true, but recently released second-quarter results show that the amount of total loans at the largest banks -- all TARP recipients -- fell during the period:

Bank

Quarter-on-Quarter Loan Growth (Q2 2009/Q1 2009)

Year-on-Year Loan Growth (Q2 2009/Q2 2008)

U.S. Bancorp (NYSE: USB)

(1.1%)

+9.9%

Citigroup (NYSE: C)

(2.4%)

(14.1%)

Wells Fargo (NYSE: WFC)

(2.6%)

Not comparable due to Wachovia acquisition.

Bank of America (NYSE: BAC)

(3.6%)

Not comparable due to Countrywide acquisition.

PNC Financial (NYSE: PNC)

(3.7%)

Not comparable due to National City acquisition.

JPMorgan Chase (NYSE: JPM)

(3.9%)

Not comparable due to Washington Mutual acquisition.

Total (6 Banks)

(3.1%)

N/A

Source: Company documents.

Furthermore, much of the new loan volume in the quarter was either mortgage re-financings or renewals of existing credit lines to businesses.

Sorting the winners from the losers
The table above suggests that Citigroup, U.S. Bancorp, and Wells Fargo gained market share during the quarter while Bank of America, JPMorgan Chase, and PNC Financial lost ground. In that regard, U.S. Bancorp looks particularly impressive, clocking up year-on-year loan growth of nearly 10%. But what price must investors pay for performance? The following table contains some clues:

Company Name

Price/Earnings (estimated FY2010 earnings)

Price/Book Value

Price/Tangible Book Value

U.S. Bancorp

13.4

1.67

3.36 Continued...