U.S. banks have posted strong earnings and returned capital to shareholders in a tough environment, positioning them to benefit as the economy improves, U.S. Bancorp Chief Executive Officer Richard Davis said.
"It's like a teenager with bad pimples and bad hair," Davis said Thursday during an investor conference in New York. "In a couple of years they will be really attractive. Hang with us, keep dating us, we'll come around."
While record low interest rates have squeezed lending margins and competition for loans remains intense, the tough operating conditions for U.S. banks aren't an "Armageddon scenario," Davis said. If investors "can actually tolerate us at this part of the cycle, then you're going to love us when things get better," he said.
The 24-company KBW Bank Index outperformed the Standard & Poor's 500 Index this quarter through Wednesday, gaining 5.8% compared with the S&P's 2.7% advance.
"Banks deserve a little credit for having not fallen off the ledge here at a time that would have otherwise been excusable," Davis said.