U.S. Bancorp (USB) Q4 Earnings Meet Estimates, Costs Rise

U.S. Bancorp (USB - Free Report) reported fourth-quarter 2019 adjusted earnings per share of $1.08, in line with the Zacks Consensus Estimate. The bottom line jumped slightly from the prior-year quarter figure.

Higher loan and deposit balances were the driving factors. However, fall in interest and fee income was recorded. Also, escalating expenses and provisions were the undermining factors.

After considering notable items, net income came in at $1.49 billion or 90 cents per share compared with $1.86 billion or $1.10 reported in the prior-year quarter.

For full-year 2019, the company reported net income of $6.91 billion or $4.16 compared with $7.1 billion or $4.14 in 2018.

Revenues Fall, Costs & Provisions Rise

U.S. Bancorp’s net revenues came in at $5.67 billion in the fourth quarter, down 2.8% year over year. Decrease in net interest and non-interest income led to this downside. The top-line figure also lagged the Zacks Consensus Estimate of $5.79 billion.

For 2019, the company reported net revenues of $23 billion, which came in line with the Zacks Consensus Estimate. Also, the top line jumped 1.5% from the prior-year quarter figure.

U.S. Bancorp’s tax-equivalent net interest income totaled $3.23 billion in the reported quarter, down 3% from the prior-year quarter. This decline mainly stemmed from a flatter yield curve, deposit pricing and shift in funding mix, along with lower rates.

Average earning assets were up 4.6% year over year supported by growth in average total loans, average investment securities and average other earning assets. Furthermore, net interest margin of 2.92% shrunk 23 basis points year over year.

U.S. Bancorp’s non-interest income fell around 2.5% on a year-over-year basis to $2.43 billion. This fall can be attributed to lower deposit service charges, treasury management fees and other income.

Provision for credit losses increased 7.3% year over year to $395 million in the December-ended quarter.

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