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U.S. Bancorp Q2 Profit Beats Estimates

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U.S. Bancorp (USB) reported second quarter earnings per share of $0.41, compared to $1.09, a year ago. On average, 22 analysts polled by Thomson Reuters expected the company to report profit per share of $0.22, for the quarter. Analysts' estimates typically exclude special items. Net income attributable to U.S. Bancorp was $689 million, down 62.2 percent from prior year. Net income applicable to common shareholders declined to $614 million from $1.74 billion.

The company said the decrease in net income year-over-year was primarily due to an increase in the provision for credit losses driven by deteriorating economic conditions caused by the impact of COVID-19 on the U.S. and global economies. The company's provision for credit losses for the second quarter of 2020 was $1.737 billion, which was $1.372 billion higher than previous year. The provision for the second quarter of 2020 reflects a $1.300 billion increase in the allowance for credit losses to recognize the expected losses from the deteriorating economic conditions.

Second quarter total net revenue was $5.84 billion compared to $5.82 billion, previous year. Analysts expected revenue of $5.54 billion for the quarter. Net interest income on a taxable-equivalent basis was $3.22 billion, a decrease of 3.2 percent, primarily due to the impact of declining interest rates, partially offset by deposit and funding mix and loan growth. Noninterest income increased 5.0 percent compared with a year ago, driven by significant growth in mortgage banking revenue due to refinancing activities, strong growth in commercial products revenue, and an increase in gains on the sale of securities.

"Our second quarter earnings results were reflective of a more challenging economic environment than we have seen in some time. However, our diversified business mix generated healthy fee revenue growth, expenses were essentially flat, and capital and liquidity positions ended the quarter in a strong position," said Andy Cecere, CEO, U.S. Bancorp.

For the second quarter, average total loans grew 6.9% on a linked quarter basis and 10.0% year-over-year. Average total deposits grew 11.2% on a linked quarter basis and 16.8% year-on-year. Nonperforming assets increased 24.0% on a linked quarter basis and 23.1% year-over-year.

U.S. Bancorp said it expects credit losses and nonperforming assets to continue to increase given current economic conditions.

Shares of U.S. Bancorp were up 3% in pre-market trade on Wednesday.

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