U.S. Bancorp beats forecasts with 6.3 percent jump in profit

U.S. Bancorp got off to a strong start in 2017, reporting Wednesday a 6.3 percent jump in first-quarter profit and steady loan growth.

The Minneapolis banking company, the nation's fifth largest, continued to outpace most of its peers in key performance measures.

Andy Cecere, who succeeded Richard Davis as U.S. Bancorp's chief executive at the company's annual meeting on Tuesday, said he was "excited for the future."

"We feel good about where we are and even better about where we're headed," said Cecere, a 32-year U.S. Bancorp veteran who became its chief operating officer two years ago. "Our businesses are strong and our culture of innovation is intact.

"So as I transition into my new role, you should not expect any major change to the strategic direction of this company given our industry-leading performance."

The company earned $1.47 billion in the first three months of the year, up from $1.39 billion in the same period a year earlier. The profit amounted to 82 cents a share, 2 cents above the consensus forecast of analysts surveyed by Zack's Investment Research.

Over the past year, average deposits increased by $32.6 billion, or 11 percent. Cecere said he expects that growth to continue, even as the bank pares away at its retail banking network. He said U.S. Bancorp has been shrinking by 50 to 100 branches per year, and similar declines will occur in 2017. He said bank branches also will be smaller and have fewer employees.

Revenue rose 5.7 percent to $5.32 billion. Noninterest revenue grew 8.4 percent to $2.32 billion, while interest revenue rose 3.7 percent to $3 billion.

The company's loan portfolio grew 4.1 percent, slower than the 6.2 percent growth rate seen in the last three months of 2016. Commercial loans, one of the biggest components of its loan base, rose 4.4 percent. Real estate lending grew at 1.8 percent. Residential mortgages rose 6.8 percent.

When asked about possible acquisitions during a conference call with analysts, Cecere said the bank would consider targets in the area of "wealth management," which has been a growth business for U.S. Bancorp.

"It is an area of interest for us," Cecere said. "If there are opportunities that present themselves, we would take a look."

The company's net interest margin, the difference between interest income and the amount of interest paid to depositors, fell 3 basis points to 3.03 percent from a year earlier and was up 5 basis points from 2.98 percent in the fourth quarter.

Evan Ramstad • 612-673-4241