U.S. Bancorp’s Stock Dips Despite Profit Increase

U.S. Bancorp’s Stock Dips Despite Profit Increase

The company’s quarterly earnings were in line with analysts’ expectations, but mortgage-banking revenue fell 11 percent, causing a decrease in net revenue.

U.S. Bancorp on Tuesday reported an increase in quarterly net income despite a slight decline in revenue.

The Minneapolis-based bank-holding company reported net income of $1.4 billion, or $0.73 per share, for the quarter that ended March 31, up 6.3 percent from the same period a year ago. Earnings matched the expectations of analysts polled by Thomson Reuters.

Revenue for the quarter, however, dipped 1.1 percent to $4.9 billion—driven largely by an 11 percent decline in mortgage-banking revenue.

“As predicted, fee revenue in the first quarter was impacted by a reduction in mortgage-banking revenue, as application volumes dropped for our company and the industry,” Chairman, President, and CEO Richard Davis said in a statement.

The decline in revenue was offset, however, by a reduction of noninterest expenses and provisions set aside for credit losses, allowing the company to post an increase in profits.

U.S. Bancorp’s average total loans rose 5.8 percent during the quarter, driven largely by a 14 percent increase in commercial loans. But its net interest margin—which serves as a barometer of how much a bank is making from its loans—fell to 3.5 percent from 3.6 percent a year earlier.

On the heels of the company’s earnings announcement, shares of U.S. Bancorp’s stock were trading down roughly 2.1 percent at $32.60 early Tuesday afternoon.

Davis said in a statement that the company’s first-quarter earnings “reflected our company’s continuing ability to perform against the backdrop of a slow-growth, uncertain economic environment.”

The company’s 1.65 percent return on average assets, among other performance ratios, continues to be among the best in the industry “and at the very top of our peer group,” Davis added.

U.S. Bancorp is Minnesota’s largest bank-holding company based on its assets, which totaled $351.3 billion at the end of 2012.