US BANCORP \DE\ Quarterly Report for Q2 Ended Jun 30, 2019

Summary

US Bancorp (USB) reported solid financial performance for the second quarter and first half of 2019. Net income attributable to U.S. Bancorp increased by 4.1% to $1.82 billion in Q2 2019, or $1.09 per diluted share, up from $1.75 billion or $1.02 per diluted share in Q2 2018. This growth was driven by a 3.2% increase in total net revenue, primarily from higher net interest income (up 3.3%) and noninterest income (up 3.1%). The company experienced loan growth across several segments, including residential mortgages, commercial loans, credit card loans, and other retail loans, which contributed to the increase in net interest income. Despite higher noninterest expenses (up 2.2%), driven by investments in business growth, and an increase in the provision for credit losses (up 11.6%), the bank maintained a stable net interest margin and improved its efficiency ratio slightly. Capital ratios remained strong, exceeding regulatory requirements. For the first six months of 2019, net income rose by 2.8% to $3.52 billion, or $2.10 per diluted share, compared to $3.42 billion, or $1.98 per diluted share, in the same period of 2018. Total net revenue increased by 2.6%, with net interest income up 3.0% and noninterest income up 2.0%. Similar to the quarterly results, loan growth contributed positively to net interest income, while increased noninterest expenses and provision for credit losses were also observed. The company's commitment to capital management and risk oversight is evident, with all regulatory capital ratios comfortably exceeding well-capitalized requirements. Investors can note the consistent revenue growth, healthy dividend increases, and strong capital position as key positive takeaways from this filing.

Key Highlights

• 1Net income attributable to U.S. Bancorp increased by 4.1% to $1.82 billion ($1.09 per diluted share) in Q2 2019, compared to $1.75 billion ($1.02 per diluted share) in Q2 2018.
• 2Total net revenue grew by 3.2% to $5.82 billion in Q2 2019, driven by increases in both net interest income (+3.3%) and noninterest income (+3.1%).
• 3Loans outstanding increased by 1.8% to $292.0 billion at June 30, 2019, compared to December 31, 2018, with notable growth in residential mortgages and commercial loans.
• 4The provision for credit losses increased by 11.6% to $365 million in Q2 2019, reflecting loan growth and higher net charge-offs, primarily in credit card loans.
• 5Noninterest expense increased by 2.2% to $3.15 billion in Q2 2019, mainly due to higher personnel, technology, and occupancy expenses.
• 6All key regulatory capital ratios (Common Equity Tier 1, Tier 1 Capital, Total Risk-Based Capital, and Leverage Ratio) exceeded well-capitalized requirements.
• 7Dividends declared per share increased by 23.3% to $0.37 in Q2 2019, compared to $0.30 in Q2 2018.

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