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U.S. Bancorp reports third quarter2021 results

By Hemanth on Oct 14, 2021 | 04:34 AM IST

Picture credit: Pensions & investments

U.S. Bancorp Reports Third Quarter2021 Results

• Net income of $2.0 billion and net revenue of $5.9 billion

• Return on average assets of 1.45% and return on average common equity of 15.9%

• Common Equity Tier 1 capital ratio of10.2% and strong levels of liquidity


3Q21 Highlights:

•  Net income of $2,028 million and diluted earnings per common share of $1.30

•  Return on average assets of 1.45% and return on average common equity of 15.9%

•  Net revenue of $5,890 million, including $3,197 million of net interest income and $2,693 million of noninterest income

•  Positive operating leverage on a linked quarter basis driven by 2.8% linked quarter noninterest income growth

•  Payments revenue increased 3.6%

•  Trust and investment management fees increased 2.9%

•  Average total earning assets growth of 3.5%year-over-year

•  Average total deposits growth of 6.4% year-over-year

•  Allowance for credit losses declined $310 million during the quarter given improving economic outlook and credit trends

•  CET1 capital ratio increased to 10.2% at September 30, 2021, compared with 9.4% at September 30, 2020

 

CEO Commentary:

 “In the third quarter we generated net revenue of $5.9 billion, net income of $2.0 billion, and a return on tangible common equity of over 20%. Our results were supported by continued momentum across our fee businesses, a pick-up in loan growth, and improvement in our efficiency ratio. Credit quality was once again better than expected and for the third straight quarter our net charge-off ratio hit a record low level. We continue to supplement our organic growth by utilizing excess capital for strategically sound, financially attractive acquisitions. During the quarter we acquired Bento Technologies, which expands the capabilities of our payments ecosystem, and entered into a definitive agreement to acquire MUFG Union Bank’s core regional banking franchise. These acquisitions provide strategic and secular growth opportunities that will allow U.S. Bank to continue to deliver industry leading results for years to come. I want to thank all our employees for their continued hard work and dedication to serving all of our stakeholders.”

Net income attributable to U.S. Bancorp was $2,028 million for the third quarter of 2021, which was $448 million higher than the $1,580 million for the third quarter of 2020, and $46 million higher than the $1,982 million for the second quarter of 2021. Diluted earnings per common share were $1.30 in the third quarter of 2021, compared with $0.99 in the third quarter of 2020 and $1.28 in the second quarter of 2021.

Net income increased on a linked quarter basis primarily due to 1.9 percent growth in total net revenue including growth in net interest income and stronger noninterest income. Net interest income on a taxable-equivalent basis increased 1.0 percent primarily due to higher loan fees mainly related to the SBA Paycheck Protection Program, lower premium amortization in the investment portfolio, and one more day in the quarter, partially offset by lower loan yields and earning asset mix. The net interest margin was flat on a linked quarter basis primarily reflecting favorable funding and deposit mix as well as higher loan fees, partially offset by lower loan yields in addition to earning asset composition. Noninterest income increased 2.8 percent compared with the second quarter of 2021 driven by increases in payment services revenue, trust and investment management fees, deposit service charges and mortgage banking revenue, partially offset by lower securities gains and other noninterest income. Noninterest expense increased 1.2 percent on a linked quarter basis reflecting higher compensation expense and professional services expense, partly offset by lower other noninterest expense.

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