By Rachel Louise Ensign And Lisa Beilfuss
U.S. Bancorp said its profit edged down in the second quarter as
revenue dropped and a key measure of lending profitability
narrowed.
Still, loans grew and earnings matched Wall Street
estimates.
The bank posted earnings of $1.48 billion, down from $1.5
billion in the prior-year period. On a per-share basis, earnings
rose to 80 cents from 78 cents.
Revenue at the Minneapolis-based company--the fifth-largest U.S.
commercial bank by assets--fell 2.8% to $5 billion. Analysts had
expected 80 cents a share in earnings and $5 billion in revenue,
according to Thomson Reuters.
Net interest margin, an important measure of lending
profitability, slipped to 3.03% from 3.27% 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 receives on loans
and investments.
Like other regional banks, U.S. Bank has been pinched by low
interest rates and is eagerly awaiting rate increases from the
Federal Reserve. Chief Executive Richard Davis last quarter
compared the bank's situation waiting for interest rates to rise to
the last few grueling moments of a gym-class test, hanging on a bar
for 90 seconds.
Mr. Davis said in May that if rates don't rise as expected the
bank would have to cut expenses and potentially trim staff. During
the June period, noninterest expense fell 2.6% to $2.68 billion,
due in part to a legal settlement in the year-earlier quarter. The
lender's efficiency ratio, which measures costs as a percentage of
revenue, was little changed at 53.2%.
Meanwhile, U.S. Bancorp and other regional banks have in recent
years invested in noninterest-income businesses that generate
stable fees and help offset interest-related declines. In the
latest quarter, noninterest income dropped 7% to $2.3 billion
thanks in part to lower mortgage banking revenue.
Average total loans grew 2.5%, spurred by an 11% rise in
commercial lending.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com and Lisa
Beilfuss at lisa.beilfuss@wsj.com