U.S. Bancorp profit matches estimates as business loans rise

NEW YORK – U.S. Bancorp, the nation’s largest regional lender, reported third-quarter profit that matched analysts’ estimates as the company made more loans to businesses.

Net income was $1.47 billion, or 78 cents a share, compared with $1.47 billion, or 76 cents, a year earlier, the Minneapolis-based firm said today in a statement. The average estimate of 26 analysts surveyed by Bloomberg was 78 cents.

U.S. Bancorp, led by CEO Richard Davis, 56, is benefiting from improved commercial lending amid signs the U.S. economy is strengthening. The bank has countered an industrywide slump in mortgages by relying on fees from businesses including credit cards and auto financing.

“Our disciplined approach returned positive operating leverage and the diversification of our business profile allowed us to maintain our momentum as the economy slowly rebounds,” Davis said in the statement.

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U.S. Bancorp gained 0.6 percent to $40.50 at 8:07 a.m. in early trading in New York. The shares fell 0.3 percent percent this year through yesterday, compared with the 0.9 percent decline of the 24-company KBW Bank Index.

Total loans increased 6.3 percent to $243 billion as commercial lending climbed 13.6 percent. Net revenue rose 2 percent to $4.99 billion, trailing analysts’ estimates of $5.01 billion. Mortgage banking revenue fell 21 percent from a year earlier, U.S. Bancorp said.

‘Economic momentum’

Noninterest expense rose 1.9 percent to $2.6 billion from a year earlier as the bank spent more on professional services and technology, while provision for credit losses increased 4.4 percent to $311 million. Net interest margin, a measure of profitability, fell to 3.16 percent from 3.27 in the previous three-month period.

U.S. Bancorp “needed some economic momentum to begin to create some incremental business,” Marty Mosby, an analyst at Vining Sparks in Memphis, Tenn., said in a note before results were released. “While the U.S. economy is far from a boom, the underlying growth metrics are at least pushing through.”

Return on equity, a measure of how well a company reinvested profit to generate additional earnings, fell to 14.5 percent from 15.8 percent a year earlier, the bank said. That’s the lowest since the second quarter of 2011, according to data compiled by Bloomberg.

U.S. economy

Commercial loans at the largest U.S. banks rose 2.8 percent in the three months ended Sept. 30, according to Federal Reserve data. The U.S. economy expanded at a 4.6 percent annual rate from April through June, while the employment rate declined to 5.9 percent in September, the lowest since 2008.

Wells Fargo & Co., the biggest U.S. home lender, said last week that third-quarter profit rose 2.7 percent to $5.73 billion, matching analysts’ estimates. PNC Financial Services Group Inc., the second-largest U.S. regional bank, reported net income climbed 1 percent to $1.04 billion as fees from businesses including asset management increased.

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