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U.S. Bancorp, Northern Trust Q2 Results Miss View, But PNC, M&T Bank Results Top

U.S. Bancorp, Northern Trust Q2 Results Miss View, But PNC, M&T Bank Results Top
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Regional banks U.S. Bancorp (USB: Quote), PNC Financial Services Group, Inc. (PNC: Quote), M&T Bank Corp. (MTB: Quote) and Northern Trust Corp. (NTRS: Quote) reported Wednesday profits for the second quarter that increased from last year. Results for U.S. Bancorp and Northern Trust missed analysts' expectations, while PNC Financial and M&T Bank topped their estimates.

Minneapolis, Minnesota-based U.S. Bancorp reported net income applicable to common shareholders of $1.41 billion or $0.76 per share for the second quarter, higher than $1.35 billion or $0.71 per share in the prior-year quarter. On average, 33 analysts polled by Thomson Reuters expected the company to report earnings of $0.76 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that "earnings were driven by a year-over-year reduction in noninterest expense and a lower provision for credit losses."

Total net revenue on a taxable-equivalent basis for the quarter declined 2.4 percent to $4.95 billion from $5.07 billion in the same quarter last year, and missed twenty-five Wall Street analysts' consensus estimate of $5.00 billion.

The revenue decline reflected a 3.4 percent decrease in non-interest income to $2.28 billion, and a 1.5 percent decline in net interest income to $2.62 billion from the year-ago quarter. Net interest margin was 3.43 percent for the quarter, compared to 3.58 percent in the same quarter last year.

Non-interest expense for the quarter declined 1.7 percent to $2.56 billion, and provision for credit losses dropped 23 percent to $362 million from the prior-year quarter.

Pittsburgh, Pennsylvania-based PNC reported net income attributable to common shareholders of $1.07 billion or $1.99 per share for the second quarter, sharply higher than $526 million or $0.98 per share in the prior-year quarter. On average, 29 analysts polled by Thomson Reuters expected earnings of $1.63 per share for the quarter.

PNC noted that growth in loans, revenues, client fee income, gains from asset sales and higher asset valuations along with lower provision for credit losses contributed to earnings.

Total revenue for the quarter increased 12 percent to $4.06 billion from $3.62 billion in the same quarter last year, and topped twenty-three Wall Street analysts' consensus estimate of $3.95 billion.

Net interest income for the quarter decreased 11 percent to $2.26 billion, while non-interest income surged 65 percent to $1.81 billion from the year-ago quarter.

Meanwhile, net interest margin was 3.58 percent, down from 4.08 percent last year. Non-interest expense declined 8 percent to $2.44 from a year ago. Provision for credit losses also decreased to $157 million from last year's $256 million.

Buffalo, New-York based M&T Bank reported net income of $328.56 million or $2.55 per share for the second quarter, higher than $214.72 million or $1.71 per share in the prior-year quarter.

Excluding items, net operating earnings for the quarter was $361 million or $2.65 per share, compared to $247 million or $1.82 per share in the year-ago quarter. Analysts expected earnings of $2.10 per share for the quarter.

Revenues for the quarter increased to $1.19 billion from $1.04 billion in the same quarter last year, and topped fifteen Wall Street analysts' consensus estimate of $1.11 billion.

Net interest income rose 5 percent to $678 million from last year, and non-interest income grew 30 percent to $509 million from last year. Net interest margin for the quarter was 3.71 percent, down from 3.74 percent in the prior-year quarter.

Non-interest operating expense totaled $578 million, down from $604 million in the prior-year quarter. Provision for credit losses decreased 5 percent to $57 million from last year's $60 million.

Meanwhile, Chicago-based custodian bank Northern Trust reported net income of $191.1 million or $0.78 per share for the second quarter, higher than $179.6 million or $0.73 per share in the year-ago quarter.

Consolidated revenues for the quarter grew 3 percent to $1.02 billion from $988.50 million in the same quarter last year.

Street was looking for second-quarter earnings of $0.83 per share on revenues of $1.03 billion.

Non-interest income, which represented 78 percent of revenue, grew 9 percent from last year to $800.4 million, primarily reflecting an 8 percent growth in trust, investment and other servicing fees as well as increased foreign exchange trading income.

Net interest income on a fully taxable equivalent basis decreased 14 percent to $228 million from last year, primarily due to a continued decline in net interest margin.

Net interest margin on a fully taxable equivalent basis declined to 1.10 percent from last year's 1.28 percent. Meanwhile, provision for credit losses remained flat with last year at $5 million.

Total assets under custody increased 9 percent to $4.88 trillion, and assets under management grew 14 percent to $803 billion from last year.

In Wednesday's regular session, USB is currently trading at $36.40, down $0.87 or 2.32% on a volume of 3.02 million shares, NTRS is trading at $59.02, down $1.73 or 2.85% on a volume of 0.56 million shares, and PNC is trading at $73.17, down $1.33 or 1.79% on a volume of 0.76 million shares. Meanwhile, MTB is trading at $117.82, up $0.23 or 0.20% on a volume of 0.11 million shares.

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by RTT Staff Writer

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