By Julie Steinberg And Michael Calia
U.S. Bancorp said its profit edged up 2.2% in the most recent
quarter as its revenue and average total loans grew, though a key
measure of lending profitability narrowed.
Earnings and revenue beat Wall Street estimates, sending shares
up nearly 3% in early afternoon trading.
The bank posted earnings of $1.49 billion, up from $1.46 billion
in the prior-year period. On a per-share basis, earnings rose to 79
cents from 76 cents. One-time items tied to equity investments and
accruals for legal matters boosted earnings by one cent a share in
the latest period.
Revenue at the Minneapolis-based bank rose 5.7% to $5.17
billion.
Analysts had expected 77 cents a share in earnings and $5.01
billion in revenue, according to Thomson Reuters.
Average total loans rose by 5.9%.
The bank also benefited from a boost in noninterest income
revenue. Noninterest income, which is generated from business lines
like credit and debit card revenue and mortgage banking revenue,
totaled $2.37 billion in the quarter, up 10% from a year earlier.
Investment products fees and trust and investment management fees
drove the increase.
U.S. Bancorp has been investing in its wealth management and
corporate trust segments, both of which are considered pieces that
"complement other businesses" and "offer diversification" for the
company, said Chief Operating Officer Andy Cecere in an
interview.
The company this week promoted Mr. Cecere, 54 years old, to his
current position. He previously served as chief financial officer.
He was replaced in that capacity by Kathleen Ashcraft Rogers, who
previously served as executive vice president for business line
planning and reporting.
On an earnings call Wednesday with analysts, Chief Executive
Richard Davis said the promotion for Mr. Cecere was "an opportunity
to prove that he can run virtually all parts of the company in the
eventual opportunity for him to run it someday."
Net interest margin, an important measure of lending
profitability, fell to 3.14% from 3.4% a year earlier on lower
reinvestment rates on investment securities and lower rates on new
loans.
The bank had posted growth in profit and loans recently,
although it faces a tough environment in which low interest rates
limit interest income.
Like some other regional banks, U.S. Bancorp has been carving
out a presence within traditional Wall Street capital markets
activity to help boost revenue. Mr. Cecere said in the interview
that the bank plans to develop more deeply across business lines
including foreign exchange and bond underwriting.
He said the bank in 2015 plans to invest in areas "we haven't
focused on, " but said the bank is probably not focusing on
traditional mergers and acquisitions activity.
Write to Julie Steinberg at julie.steinberg@wsj.com and Michael
Calia at michael.calia@wsj.com