It has largely been a dismal first quarter for banks as far as profits go. Last week, JPMorgan Chase, Wells Fargo, Bank of America, Citigroup, and PNC all reported substantial year-over-year declines. In the area of investment banking, Goldman Sachs and Morgan Stanley both reported significant over-the-year declines in net earnings.
U.S. Bancorp went against that trend, however. In the bank's Q1 earnings statement released on Tuesday, U.S. Bancorp reported a first quarter net income of $1.386 billion, down by only 3 percent from Q1 2015's net income of $1.43 billion. The price per diluted common share, $0.76 percent, remained unchanged over-the-year in Q1. The bank's average total loans grew by 5.8 percent over the first quarter up to $14.3 billion, and ROE and efficiency ratio were reported at 13 percent and 54.6 percent, respectively.
According to the announcement, lower mortgage revenue was partially behind U.S. Bancorp's 3 percent year-over-year decline in net income. The lower mortgage banking revenue was due to lower production and higher noninterest expense. Other factors that drove the slight decline in net income were a higher provision for credit losses driven by energy-related commercial loan downgrades. The bank experienced a 6 percent decline over-the-quarter in net income that was driven by, among other factors, seasonality in some of the bank's business lines and a higher provision for credit losses driven by energy-related loans.
“U.S. Bancorp is off to a solid start in 2016 as we once again delivered industry-leading performance metrics against a backdrop of global concerns driving long-term interest rates lower and continuing pressure in the energy sector,” said U.S. Bancorp Chairman and CEO Richard K. Davis. “We continued to produce strong loan and deposit growth which combined with a stable net interest margin, resulted in growth in net interest income. Our payments-related businesses remain strong and we continue to invest in those businesses, as demonstrated by the acquisition of the $1.6 billion retail card portfolio at the end of 2015. Although the pressures from the energy industry negatively impacted the quarter, we took appropriate measures and remain confident that we are well positioned to continue delivering industry-leading returns throughout the year.”
Residential mortgages partially drove the 5.8 percent over-the-year increase in average total loans; residential mortgages at U.S. Bancorp grew by 5.4 percent over-the-year in Q1 and by 2.3 percent over-the-quarter
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