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US Bancorp 2Q net income rises on lower costs

MINNEAPOLIS (AP) -- U.S. Bancorp said Wednesday its second-quarter net income rose 4 percent, helped by drops in expenses and the amount of money set aside to cover soured loans.

The Minneapolis bank earned $1.48 billion, or 76 cents per share, after paying preferred shareholders. That was up from $1.35 billion, or 71 cents per share, in the same quarter of 2012. The recent quarter's profit matched the average estimate of analysts polled by FactSet.

U.S. Bancorp said it got a boost from a 2 percent drop in non-interest expense to $2.56 billion and a 23 percent drop in its provision for loan losses to $362 million.

Meanwhile, net interest income, fell 2 percent to $2.67 billion, hurt by lower loan and investment portfolio rates. Net interest income combines interest on loans that the bank collects and interest on deposits and debt that the bank pays out. It is a measure of the bank's ability to profit from its lending.

Average total loans increased 5 percent, helped by an 11 percent increase in average commercial loans.

Net charge-offs, or loans written off as uncollectible, plunged 25 percent to $392 million, helped by a 32 percent drop in residential mortgage charge-offs to $173 million.

Non-interest income, which includes revenue from fees and other sources, fell more than 3 percent to $2.28 billion, pulled down by a drop in mortgage banking revenue.

Shares of U.S. Bancorp fell 32 cents to $36.94 in premarket trading.