Cost control helps U.S. Bank boost earnings

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Minneapolis-based U.S. Bancorp reported second-quarter net income totaling $1.62 billion, an 18% increase over the same period in 2023, driven largely by slimmed-down operating expenses.

“We continued to invest for the future while managing our operating expenses prudently, with both linked quarter and year-over-year declines in noninterest expense,” Chairman and CEO Andy Cecere said Wednesday in a press release.

Migration of deposits from noninterest-bearing accounts to interest-bearing ones continued to act as a headwind during the quarter that ended June 30, with the noninterest portfolio shrinking by about $1.4 billion. That trend, combined with a 3% year-over-year increase in total deposits to $514 billion, resulted in a $183 million linked-quarter increase in interest expenses.

Chief Financial Officer John Stern said he is hopeful the impact of deposit repricing should be limited in future quarters. “We’ll see some more deposit migration going forward, but it should be modest,” Stern said Wednesday on a conference call with analysts.

The $680.1 billion-asset bank reported quarterly net charge-offs of $538 million, up slightly on a linked-quarter basis, but down 17% from June 30, 2023. An increase in problem office loans pushed nonperforming assets to $1.85 billion, or 0.49% of total loans and leases. A year ago, nonperforming assets totaled $1.1 billion, or 0.29% of loans.