U.S. Bancorp (USB) reported first quarter earnings of $0.96 per share, beating street estimates driven by bump in interest income and lower tax expenses. The bank’s bottom line rose 13.7% to $1.68 billion over prior year period, but dropped marginally compared to fourth quarter. Revenue increased 3.4% to $5.47 billion.
Net interest margin, a key metric tracked by investors, improved 7 basis points to 3.13%. Thanks to rising interest rates, the bank’s interest income grew 5.5% to $3.2 billion over last year quarter. The regional bank’s expenses shot up 5% to $3.05 billion mainly due to increasing labor costs. On the flip side, tax expenses nosedived 28.8% to $391 million on a taxable-equivalent basis.
Average loans rose 2.3% due to across the board growth in loans disbursed offset by 6.5% drop in commercial real estate loans. The bank’s average deposits saw 1.9% increase, primarily driven by time deposits.
Asset quality improved in the quarter where bank’s non-performing assets (NPA) decreased 19.5% to $1.2 billion, driven by improved performance in commercial and mortgage related loans. All the segments of the bank recorded double-digit growth compared to last year except Treasury and Corporate Support line’s profits declined 33%. The decrease was primarily due to increased labor costs and reduced profit contribution from investments from stocks.