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U.S. Bancorp (USB) Q1 Earnings & Revenues Beat Estimates

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U.S. Bancorp USB reported first-quarter 2022 earnings per share of 99 cents, which beat the Zacks Consensus Estimate of 93 cents. However, results do not compare favorably with the prior-year quarter’s figure of $1.45.

Results were supported by an increase in revenues, loan growth and lower non-performing assets. The company’s capital position was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.

Net income came in at $1.56 billion compared with the prior-year quarter’s $2.28 billion.

Revenues & Costs Rise

In the first quarter, U.S. Bancorp’s total revenues, excluding net securities gain, were $5.57 billion, up 1.2% year over year. The top line beat the Zacks Consensus Estimate of $5.54 billion.

U.S. Bancorp’s tax-equivalent net interest income totaled $3.2 billion in the reported quarter, up 3.6% from the prior-year quarter. The increase mainly stemmed from higher loan and investment securities balances, and favorable deposit and funding mix, partially offset by lower loan yields and mix, as well as lower loan fees.

Average earning assets climbed 6.5% year over year, supported by growth in average investment securities and average total loans, partially offset by lower average interest-bearing deposits with banks. However, the net interest margin of 2.4% shrunk six basis points, mainly due to a change in mix of loans and lower loans within fixed-rate portfolios, partially offset by the net benefit of funding composition.

U.S. Bancorp’s non-interest income increased marginally on a year-over-year basis to $2.4 billion. The rise was mainly owing to stronger payment services revenues, trust and investment management fees, deposit service charges, and treasury management fees, mostly offset by lower commercial products revenues, mortgage banking revenues and other non-interest income.

U.S. Bancorp’s non-interest expenses climbed 3.6% year over year to $3.5 billion. The rise mainly resulted from elevated compensation expenses, professional services expenses, and marketing and business development.

Efficiency ratio was at 62.8%, higher than the year-ago quarter’s 62.1%. An increase in the ratio indicates a fall in profitability.

U.S. Bancorp’s average total loans improved 3.4% sequentially to $313 billion. Average total deposits were up 1% from the prior quarter to $454.2 billion.

Credit Quality Decent

Provision for credit losses in the reported quarter was $112 million against benefit of $827 million in the prior-year quarter.

Nonetheless, net charge-offs were $162 million, down 27.4% year over year. Total allowance for credit losses was $6.1 billion, down 12.3%. U.S. Bancorp’s non-performing assets were $811 million, plunging 32.5% year over year.

Mixed Capital Position

In the first quarter, U.S. Bancorp maintained a mixed capital position. The Tier 1 capital ratio was constant at 11.5% compared with the prior-year quarter.

All regulatory ratios of U.S. Bancorp continued to be more than well-capitalized requirements. In addition, reflecting the full implementation of the current expected credit losses methodology, the Tier 1 capital to risk-weighted assets ratio was 9.5 % as of Mar 31, 2022.

However, Common Equity Tier 1 capital to risk-weighted assets ratio under the Basel III standardized approach fully implemented was 9.8% as of Mar 31, 2022, lower than 9.9% reported in the year-ago quarter.

U.S. Bancorp posted deterioration in book value per share, which decreased to $29.87 as of Mar 31, 2022 from $30.53 recorded at the end of the year-earlier quarter.

The tangible common equity to tangible assets ratio was 6.0% as of Mar 31, 2022, down from the prior-year quarter’s 6.6%.

Our Take

The bank’s improving balance-sheet position and revenues are positives. Decent credit quality is expected to continue supporting its financials.
However, continued escalating expenses are downsides. Also, elevated provision for credit losses is a headwind.

U.S. Bancorp Price, Consensus and EPS Surprise

U.S. Bancorp Price, Consensus and EPS Surprise
U.S. Bancorp Price, Consensus and EPS Surprise

U.S. Bancorp price-consensus-eps-surprise-chart | U.S. Bancorp Quote

Currently, U.S. Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Dates of Other Stocks

Fifth Third Bancorp FITB is slated to report first-quarter 2022 results on Apr 19.

Over the past 30 days, the Zacks Consensus Estimate for Fifth Third’s first-quarter earnings has moved 2.8% lower to 70 cents. This indicates a 24.7% decline from the prior-year quarter.

First Horizon National Corporation FHN is slated to report first-quarter 2022 results on Apr 19.

Over the past 30 days, the Zacks Consensus Estimate for First Horizon’s Q1 earnings has moved 2.9% lower to 34 cents. This indicates a 33.3% decline from the prior-year quarter.

Citizens Financial CFG is slated to report first-quarter 2022 results on Apr 19.

Over the past 30 days, the Zacks Consensus Estimate for Citizens Financial’s first-quarter earnings has moved 3% lower to 96 cents. This indicates a 31.9% decline from the prior-year quarter.


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