Sumary of Despite Falling Profits, U.S. Bancorp's Q2 Earnings Were Actually Better Than Q1:
- While loan growth is still lagging, fee income bounced back nicely and the bank continued to manage expenses well amid a challenging environment.
- This capital from reserves essentially goes back onto the income statement as profits.
- Not factoring in reserves, operating income (total revenue minus expenses) at the bank grew by nearly 15% in the second quarter from the first quarter.
- Average loan balances were flat quarter over quarter, but net interest income grew 2.4% from the first quarter of the year.
- The main source of revenue growth in the quarter came from the bank’s fee income business segments, which reported revenue that grew 10% from the first quarter of the year and was slightly up on a year-over-year basis.
- A good quarter of expense management Expenses have been a big area of focus in the financial sector in the second quarter, with many large banks turning in elevated expenses as they try to strip away COVID-related expenses and get back to more normal expense run rates in the current low-interest rate and challenging revenue environment.
- CFO Terrence Dolan said that the bank plans to manage expenses flat going forward, despite the challenging revenue environment, and he anticipates more consistent positive operating leverage in a more normalized revenue environment.
- Getting back to business as usual This quarter was much more consistent with the type of earnings U.S. Bancorp normally reports.