U.S. Bancorp, 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. 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.