U.S. Bancorp (NYSE:USB) reported its second quarter results before opening bell, posting net income of $1.484 billion or 76 cents per diluted common share and meeting the expectations of analysts. The company’s net revenue for the second quarter was $4.948 billion. Analysts were expecting the bank to report second quarter earnings of 76 cents per share on $5 billion in revenue.
U.S. Bancorp’s (USB) earnings drivers
The bank attributed its record second quarter earnings to a year-over-year reduction in noninterest expense and lower provisions for credit losses. Like other banks which have already reported their second quarter earnings, U.S. Bancorp (NYSE:USB) benefited from early signs of a potentially strengthening economy.
U.S. Bancorp (NYSE:USB)’s return on average assets was 1.7 percent, while its return on average common equity was 16.1 percent. Its efficiency ratio was 51.7 percent.
Lending activity strengthens
The bank also reported $65.7 billion in new lending activity during the second quarter. The activity included $37.6 billion in new and renewed commercial and commercial real estate commitments. The bank also reported $2.6 billion in new credit card accounts and $25.5 billion in mortgage and other retail loan originations.
Growth in average total loans was 5.2 percent during the second quarter of the year or 7.2 percent excluding covered loans and 1.2 percent on a linked quarter basis.
Average total commercial loans grew 11.2 percent from the second quarter of last year and 2.2 percent since last quarter. Average total commercial real estate loans grew 3.7 percent year over year and 1.8 percent quarter over quarter. Average commercial and commercial real estate commitments grew 10.2 percent since the same quarter last year and 2.2 percent quarter over quarter.
Other signs of strength at U.S. Bancorp (USB)
U.S. Bancorp (NYSE:USB) also reported a 3.6 percent increase in average noninterest-bearing deposits and a 13.1 percent increase in average total savings deposits over the same quarter last year. Total savings deposits grew 2.1 percent over the linked quarter, while noninterest-bearing deposits remained fairly stable.
Net charge-offs fell $41 million quarter over quarter, while provision for credit losses was $30 million less than net charge-offs.
The bank also reinforced its capital position through capital generation, posting a Tier 1 capital ratio of 11.1 percent at the end of June. Tier 1 common equity to risk-weighted assets ratio was 9.2 percent.
Capital returned to shareholders
U.S. Bancorp (NYSE:USB) also returned 73 percent of its second quarter earnings to shareholders, including the repurchase of 18 million common shares during the second quarter and an increase of its annual dividend from 78 cents to 92 cents.