U.S. Bancorp Dips as Revenue Misses Estimates: Minneapolis Mover

U.S. Bancorp (USB), the nation’s largest regional lender, fell the most in the KBW Bank Index after reporting first-quarter revenue that missed analysts’ estimates.

U.S. Bancorp declined 1.7 percent, or 57 cents, to $32.74 at 9:41 a.m. in New York trading, the worst performer in the 24- company index. Net income climbed 6.7 to $1.43 billion, or 73 cents a share, from $1.34 billion, or 67 cents, a year earlier, as the company set aside less for soured loans, the Minneapolis- based bank said today in a statement. That matched the 73-cent average estimate of 32 analysts surveyed by Bloomberg.

Banks including JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. are relying on cost reductions and smaller loan-loss reserves to help boost profits amid a revenue slump. At U.S. Bancorp, revenue declined 1.1 percent to $4.87 billion, missing the $5.03 billion average estimate of 18 analysts surveyed by Bloomberg.

“This year will be a harder year for revenue growth,” Chief Executive Officer Richard Davis, 55, said on a conference call following the results.

The drop in net revenue was driven by a decline in noninterest income, which fell 3.3 percent to $2.17 billion. Mortgage banking revenue decreased 11 percent to $401 million.

“Banks reflect the economy, which is a slow-growth, uncertain time,” Chief Financial Officer Andrew Cecere said in a phone interview today. “Banks are just a reflection of that.”

U.S. Bancorp set aside $403 million to cover soured loans in the first quarter, a 16 percent decline from a year earlier. The lender cut noninterest expenses by 3.5 percent to $2.47 billion from a year earlier.

The bank said in March it will increase its share repurchases by $370 million to $2.25 billion and ask its board to raise its second-quarter dividend 18 percent to 23 cents.

U.S. Bancorp has gained 2.5 percent this year, trailing the 8.1 percent advance of the bank index.

To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net.

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.