U.S. Bancorp Posts Drop in 1Q Profit on Revenue, Provision for Credit Losses Hit

U.S. Bancorp, the Minneapolis-based parent company of U.S. Bank, reported a decrease in net income for the first quarter of 2023 compared to the same period last year. The bank posted a net income of $1.33 billion, or 78 cents per share, which represents a decline from the $1.70 billion, or $1.04 per share, reported during the first quarter of 2022.

The decrease in net income can be attributed to lower revenue and an increase in the provision for credit losses. The provision for credit losses is a reserve set aside by the bank to cover potential loan losses. In the first quarter of 2023, the provision for credit losses increased to $332 million compared to $228 million in the same quarter last year.

Despite the decline in net income, U.S. Bancorp reported an increase in total assets and loans. As of March 31, 2023, total assets were $588.3 billion, up from $567.5 billion a year ago. Loans also increased to $428.3 billion from $418.5 billion a year ago.

The bank's net interest income, which is the difference between interest earned on loans and interest paid on deposits, was $2.9 billion, down from $3.0 billion in the same quarter last year. Noninterest income was $1.3 billion, up from $1.2 billion a year ago.

U.S. Bancorp's results reflect the economic uncertainty and potential impact of rising interest rates on the banking industry. The bank's provision for credit losses suggests that it is taking a cautious approach to lending and preparing for potential loan losses.

The bank's CEO, Andy Cecere, stated that the bank's results were impacted by "lower interest rates and a more challenging revenue environment." However, he expressed confidence in the bank's ability to generate strong returns and grow its business over the long term.

U.S. Bancorp's stock price reacted negatively to the earnings report, with shares falling by more than 3% in after-hours trading following the release of the earnings report. The stock was trading at around $52 per share as of 5:30 pm ET on April 17, 2023.