U.S. Bancorp (NYSE: USB) reported first-quarter 2015 results before markets opened Wednesday. The consumer and commercial banking company reported adjusted diluted quarterly earnings per share (EPS) of $0.76 on revenue of $4.91 billion. In the same period a year ago, the bank reported EPS of $0.73 on revenue of $3.99 billion. First-quarter results also compare to the consensus estimates for EPS of $0.76 on revenue of $4.95 billion.
Quarterly profits rose 2.4% from $1.4 billion in the first quarter of 2014 to $1.43 billion, principally due to increases in net interest income and fee-based revenue, and a decline in the provision for credit losses, partially offset by an increase in noninterest expense.
The bank’s return on average assets slipped from 1.56% a year ago to 1.44% and the return on average common equity dipped from 14.6% to 14.1%. Net interest margin also came in lower, down from 3.35% in the first quarter of last year to $3.08%.
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The quarterly revenue increase was due to a 2.2% increase in noninterest income and a 1.7% increase in interest income.
U.S. Bancorp’s noninterest expenses rose 4.8% year-over-year to $2.67 billion, primarily due to an increase in compensation expense, reflecting the impact of merit increases, acquisitions and higher staffing for risk and compliance activities and increased benefits expense due to higher pension costs, along with higher other expense primarily related to mortgage servicing-related activities.
The provision for credit losses in the first quarter this year totaled $264 million, down 13.7% compared with $306 million in the year-ago quarter.
Bank CEO Richard K. Davis said:
In the first quarter, we returned 70 percent of our earnings to shareholders through dividends and share buybacks, demonstrating our continued commitment to value creation for our shareholders. We were also pleased to receive the Federal Reserve’s non-objection to our capital distribution plan, which will allow us to increase our annual dividend by 4.1 percent in the second quarter.
The bank repurchased 12 million shares in the first quarter.
U.S. Bancorp reduced its transitional Basel III Tier 1 common equity ratio to 9.6% in the first quarter from 9.7% in the year-ago quarter. Its Tier 1 capital ratio was 11.1%, and its total risk-based capital ratio came in at 13.3%. The bank noted that all regulatory ratios continue to be in excess of “well-capitalized” requirements.
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The bank did not offer guidance in its press release, but the consensus estimates call for second-quarter EPS of $0.82 on revenues of $5.11 billion. The EPS estimate for the 2015 fiscal year is $3.26 on revenues of $20.54 billion.
U.S. Bancorp’s shares are down about 3% year-to-date, but up around 7.5% for the past 12 months. The stock has been bouncing around the $44 per share level since November.
Shares traded down about 1.9% in the premarket Wednesday to $42.70, having closed on Tuesday at $43.53. The current 52-week range is $38.10 to $46.10. Thomson Reuters had a consensus analyst price target of $46.65 before the results were announced.
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