U.S. Bancorp Profit Matches Analyst Estimates on Lower Expenses

U.S. Bancorp, the nation’s biggest regional lender, posted profit that matched analysts’ estimates as expenses declined and commercial lending accelerated.

Second-quarter net income was $1.48 billion, or 80 cents a share, little changed from $1.5 billion, or 78 cents, a year earlier, the Minneapolis-based bank said Wednesday in a statement.

Record low interest rates have been “torture” for regional banks, and margins won’t improve until the Federal Reserve raises its benchmark rate, Chief Executive Officer Richard Davis has said. U.S. Bancorp has said it plans to hold more mortgages on its balance sheet instead of selling them.

“They have to show loan growth,” said Chris Mutascio, an analyst at Stifel Financial Corp.’s KBW unit. “Investors are focused on loan growth and whether regional banks can grow loans as a means to fight off margin compression.”

A rise in rates could help bolster net interest margin, the difference between what a bank pays for deposits and charges for loans. U.S. Bancorp’s NIM fell to 3.03 percent in the second quarter from 3.08 percent the preceding period and 3.27 percent a year earlier, according to the statement.

Home lenders originated $378 billion of mortgages in the second quarter, a 21 percent increase over the preceding period and a 27 percent gain from a year earlier, according to a June 18 forecast from the Mortgage Bankers Association, a Washington-based trade group. Household spending increased 0.9 percent in May, the biggest gain in six years, Commerce Department figures show.

U.S. Bancorp shares have declined 2.4 percent this year, compared with the 5.1 percent advance of the 24-company KBW Bank index.

JPMorgan Chase & Co., the biggest U.S. lender, said Tuesday that second-quarter profit climbed 5.2 percent to $6.29 billion as the firm cut costs to compensate for falling revenue in its retail and investment bank businesses. Wells Fargo & Co. posted net income of $5.72 billion, little changed from a year earlier, as higher interest rates crimped revenue from mortgage banking.

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