Rough seas for even the best of banks
Placing a value on US Bancorp depends a lot on the future of the banking sector.
- Provisions for credit losses dropped by $475 million.
- Net interest income (what the bank earns on the difference between what it pays for the funds it needs and what it charges on the loans it makes) grew by 5.9% year-to-year.
- Non-interest income (the fees for payments, service charges, commercial products, and trust management) edged up by 2.9%.
- Average loan growth rose by 4.5% (excluding acquisitions) year-to-year. This may not sound like much of a growth rate, but it's the highest growth rate for loans I’ve seen from a bank this earnings season.
- Average total deposits grew 13.2% (again, excluding acquisitions) year-to-year.
- What’s called average low-cost deposits grew by 23%. These are deposits in accounts such as non-interest bearing checking accounts that don’t pay much interest. They’re a key bank strength these days, when many banks are forced to raise capital rather than borrow funds in the short-term markets.
- Charge-offs on bad debt was lower than expected, at $669 million (instead of $750 million) and down 10.4% from the second quarter. Nonperforming assets were just 1.6% of loans.
- Tier 1 core capital was 10.8% at the end of the quarter.
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