U.S. Bancorp (USB:US), the nation’s fifth- largest lender by deposits, reported a 28 percent increase in first-quarter profit that beat analysts’ estimates as revenue rose and credit losses fell.
Net income climbed to $1.34 billion, or 67 cents a share, from $1.05 billion, or 52 cents, a year earlier, the Minneapolis-based bank said today in a statement. Earnings beat the 64-cent average estimate (USB:US) of 31 analysts surveyed by Bloomberg.
Chief Executive Officer Richard Davis, 54, is seeking to take market share in small-business banking in anticipation of an upswing in the U.S. economy. U.S. Bancorp, Minnesota’s largest bank, said in March it was increasing its quarterly dividend 56 percent to 19.5 cents a share after the Federal Reserve reviewed the lender’s proposed capital plan.
“The slow, but steady, economic recovery contributed to the continued improvement in our credit quality this quarter,” Davis said in the statement.
U.S. Bancorp rose 56 cents to $31.72 in early trading at 7:34 a.m. in New York. The bank’s shares gained 15 percent this year through yesterday, compared with a 21 percent increase in the KBW Bank Index of 24 U.S. lenders.
Revenue grew 9.1 percent to $4.93 billion as mortgage banking more than doubled to $452 million from $199 million in the year-earlier period.
U.S. Bancorp set aside $481 million for soured loans in the first quarter, a 36 percent drop from the same period last year. Total net charge-offs also declined, falling to $571 million from $805 million.
The bank’s total loans increased by 6.4 percent to $210.2 billion as commercial loans and residential mortgages grew. Total commercial loans increased to $57.1 billion from $48.7 billion, and residential mortgages rose to $37.8 billion from $31.8 billion.
Non-interest expense rose 11 percent to $2.56 billion. U.S. Bancorp’s net interest margin, the difference between what a bank pays to borrow money and what it gets for loans, fell to 3.6 percent in the first quarter from 3.69 percent last year.
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