U.S. Bancorp Earnings: Here is What You Need to Know

U.S. Bancorp (NYSE: USB), or U.S. Bank, reported its quarterly earnings early Wednesday morning from Minneapolis. And the news was generally positive, which sent shares up 1 percent before the market opened, and the stock continued in the green in the morning trading session, up about another 0.4 percent to just month of $33 per share. The bank’s Q2 earnings per share was reported at 71 cents, which beat estimates by 1 cent, with the revenue number of $5.07 billion beating expectations by $110 million (2 percent) and beating the Q2 2011 number by 8.1 percent.

The numbers looked quite healthy for U.S. Bank. Profit was up nearly 18 percent over the same period a year ago, net interest income was up almost 7 percent and net interest margin dropped to 3.58 percent from 3.67 percent. Also, the bank reported deposits were up more than 10 percent year-over-year and total loans were up nearly 8 percent. The loan loss provisions stood at $470 million, a 22-percent drop from a year ago ($572 million). Fee-based revenue rose by nearly 10 percent, as well, compared to Q2 of 2011.

U.S. Bancorp CEO Richard K. Davis said, “I am exceptionally proud of our Company’s second quarter 2012 results, as we reported record diluted earnings per common share of $.71, an 18.3 percent increase over the prior years quarter and a 6.0 percent increase over the first quarter of 2012. Further, our performance metrics remained industry-leading and within the range of our long-term objectives, with a return on average assets of 1.67 percent, a return on average common equity of 16.5 percent and an efficiency ratio of 51.1 percent. Our results benefited from a solid balance sheet and fee income growth this quarter. Both average loans and average deposits increased over the second quarter of last year and the prior quarter. Our investment in mortgage banking over the past few years was very well-timed, as we posted both record origination volume and revenue in the second quarter. All three categories of payments-related revenue were seasonally strong this quarter. In fact, we achieved growth in virtually every fee category this period versus the prior quarter. Expenses were well-controlled, and we achieved positive operating leverage on both a year-over-year and linked quarter basis.”

The relative health of U.S. Bancorp compares to some of its brethren (BAC, WFC, as examples) puts hedge funds like Warren Buffett’s Berkshire Hathaway and Andreas Halvorsen’s Viking Global in good position to grow in the near-term. At the end of March, Berkshire had $2.2 billion invested in USB stock, while Viking was in for $415 million. Viking, however, had sold about 39 percent of its stake during that quarter.