By Julie Steinberg and Chelsey Dulaney
U.S. Bancorp said its profit grew 2.4% in the most recent
quarter as its revenue and average total loans increased, though a
key measure of lending profitability edged down.
Earnings met Wall Street estimates, while revenue came in
slightly below. Shares were little changed in early afternoon
trading.
The bank posted earnings of $1.43 billion, up from $1.4 billion
in the prior-year period. On a per-share basis, earnings rose to 76
cents from 73 cents a year ago.
Revenue at the Minneapolis-based bank rose 1.9% to $4.91
billion.
Analysts had expected 76 cents a share in earnings and $4.95
billion in revenue, according to Thomson Reuters.
Net interest margin, an important measure of lending
profitability, edged down to 3.08% from 3.35% a year earlier. Net
interest margin measures how much a bank earns from the difference
between what it pays out on deposits and what it gets on loans and
investments.
Like other regional banks, U.S. Bancorp has faced a tough
environment in which low interest rates have limited interest
income and have pushed down net interest margin.
Bank executives on a call with analysts Wednesday discussed the
interest-margin compression at length and said they expect it to
continue in the second quarter. U.S. Bancorp Chairman and Chief
Executive Richard Davis said that he expects rates to rise this
year and that when they do, "so many things will start to improve,"
including the margin metric.
U.S. Bancorp and other regional banks have in recent years
invested in so-called noninterest income businesses that generate
stable fees and help offset interest-related declines. Chief
Operating Officer Andrew Cecere in an interview said the bank is
gaining market share in its corporate trust business, and has also
invested in its business that services hedge and mutual funds.
Regarding capital markets, another area the bank has expanded
in, Mr. Cecere said: "To the extent there are opportunities to grow
that business, we'll continue to build it."
The bank said average total loans rose by 5.1%, and Mr. Davis
said he is aiming toward 6% loan growth year-over-year by the end
of the year, though he said the bank won't lower its credit quality
standards to achieve that figure.
Executives on Wednesday also said they were interested in
looking at the assets being sold by General Electric Co. as part of
its plan to significantly scale back its finance arm.
Write to Julie Steinberg at julie.steinberg@wsj.com and Chelsey
Dulaney at Chelsey.Dulaney@wsj.com