- U.S. Bancorp reports first-quarter earnings per share of 67 cents.
- Analysts were expecting EPS of 64 cents.
- Mortgage banking revenue more than doubles, to $452 million.
|U.S. Bancorp CEO Richard K. Davis|
The company-s net interest margin -- the difference between its average yield loan loans and investments and its average cost for deposits and wholesale borrowings -- was 2.60% during the first quarter, declining from 3.69% the previous quarter, and matching the margin from a year earlier. USB said "the expected decline in the net interest margin year-over-year reflected higher balances in lower yielding investment securities and a decline in loan yields, partially offset by a reduction in the cash balances held at the Federal Reserve compared with the first quarter of 2011, as well as the credit card balance transfer fees classification change." Overall earnings performance remained strong, with a first-quarter return on average assets of 1.60%, compared to 1.62% the previous quarter and 1.38% a year earlier. The return on average common equity was 16.2% during the first quarter, compared to 16.8% in the fourth quarter, and 14.5% during the first quarter of 2011. Jefferies analyst Ken Usdin said that mortgage banking drove USB's earnings beat, "as gain-on-sale margins were much better than expected," and that "excluding mortgage banking, results were more in line. Usdin said that "all-in, estimates are likely stable-to-up on the results." The analyst rates U.S. Bancorp a "Hold," with a $31 price target. U.S. Bancorp's shares closed at $31.16 Monday, returning 16% year-to-date, following a 2% return during 2011.The shares trade for 10.5 times the consensus 2013 EPS estimate of $2.97. The consensus 2012 EPS estimate is $2.69. The company on in March announced that it would increase its quarterly dividend to 19.5 cents from 12.5 cents, and that its board of directors had authorized the repurchase of up to 100 million common shares. Based on the new dividend payout, the shares have a dividend yield of 2.50%. Interested in more on U.S. Bancorp? See TheStreet Ratings' report card for this stock. -- Written by Philip van Doorn in Jupiter, Fla. To contact the writer, click here: Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.