U.S. Bancorp (USB, Financial) released its third-quarter earnings for 2023 on October 18, showing a robust performance despite a challenging interest rate environment. The company reported a net income of $1,523 million and diluted earnings per common share of $.91. The return on average assets was 1.04%, return on average common equity was 13.7%, and the efficiency ratio was 60.4%, all adjusted for merger and integration-related charges.
Financial Highlights
U.S. Bancorp (USB, Financial) reported net interest income on a taxable-equivalent basis of $4,268 million, a 10.7% increase year-over-year. This was primarily due to the impact of the acquisition of MUFG Union Bank (MUB) and rising interest rates on earning assets. However, net interest income decreased 4.1% linked quarter due to deposit mix and pricing.
Noninterest income increased 11.9% year-over-year and 0.6% on a linked quarter basis, as adjusted for notable items. The company saw average total loan growth of 11.9% year-over-year and a decrease of 3.1% on a linked quarter basis. Meanwhile, average total deposit growth was 12.2% year-over-year and 3.0% on a linked quarter basis.
CEO Commentary
“In the third quarter we delivered earnings per diluted share of $1.05 and a return on tangible common equity of 21.0 percent, both as adjusted for merger and integration-related charges. This quarter our common equity tier 1 ratio increased 60 basis points to 9.7 percent, as we continued to build capital through enhanced earnings generation and capital accretive initiatives. While the challenging interest rate environment continues to impact net interest income growth for us and the industry, average total deposits increased 3.0 percent, to $512 billion, and third quarter profitability benefited from strength across our diversified fee businesses and disciplined expense management. Third quarter credit quality trends were in line with expectations and we continued to add to our reserve level reflecting prudent assessment of the evolving credit environment. I want to thank all of our employees for their dedication to helping our clients, communities, and shareholders.” — Andy Cecere, Chairman, President and CEO, U.S. Bancorp
Business and Other Highlights
U.S. Bancorp (USB, Financial) continues to lead in digital banking, ranking number one for mobile banking capabilities and customer experience by Keynova Group for the fifth time in a row during the third quarter of 2023. The company also launched the Connected Partnership Network, an online marketplace of third-party payment and treasury solutions that enables customers to be more fully integrated with U.S. Bank.
Looking Ahead
Despite the challenging interest rate environment, U.S. Bancorp (USB, Financial) remains optimistic about its future performance. The company will continue to focus on enhancing its earnings generation, building capital, and managing expenses prudently. It will also continue to invest in digital banking and other initiatives to improve customer experience and drive growth.
