By Robb M. Stewart and Dean Seal


U.S. Bancorp notched a higher profit for the latest quarter, though interest income growth was more sluggish than anticipated.

The Minneapolis-based parent of U.S. Bank said before the opening bell on Thursday that second-quarter earnings rose to $1.82 billion, or $1.11 a share, from $1.6 billion, or 97 cents a share, a year earlier. That beat forecasts for $1.07 a share from analysts polled by FactSet.

Revenue, excluding gains on securities, was up 2.3% to $7.06 billion, just above the consensus forecast for $7.05 billion, according to FactSet.

Net interest income nudged up less than 1% to $4.08 billion, thanks largely to fixed-asset repricing, loan mix and lower rates paid on interest-bearing deposits.

The figure missed guidance, Truist analysts said in a research note. It's also down from the prior quarter's total of $4.12 billion as more customers rotated into higher-rate products and intensifying competition for deposits hurt banks' pricing power.

"The competitive deposit environment more than offset the benefits of fixed asset repricing," Chief Financial Officer John Stern said.

The bank's slow start on net interest income this year is driving year-end revenue toward the low-end of guidance for 3% to 5% growth, according to the Truist analysts.

The company's net interest margin also declined more than expected from last quarter, which was a tough look given that other banks are expanding their net interest margin, the Truist analysts said.

Shares slipped 2.1% to $44.74 in late morning trading.

There were brighter spots elsewhere. The bottom line benefited from a lower loan-loss provision and growth in fee income.

Noninterest income was 3.9% higher at $2.92 billion, buoyed by an increase in payment-services revenue, trust and investment-management fees, though partially offset by lower mortgage banking revenue.

The company's noninterest costs were trimmed 0.8% from last year by lower compensation and employee benefits.

For the latest period, U.S. Bancorp narrowed its provision for credit losses to $501 million from $537 million in the prior quarter and $568 million a year earlier. The decline reflected loan-portfolio sales during the second quarter and improved credit quality, the company said.

Chief Executive Gunjan Kedia said the quarter highlighted U.S. Bancorp's momentum across several of its fee-income businesses, which she said now represent about 42% of company-wide revenue. Fee growth was led by payment-services revenue, trust and investment-management fees and treasury-management fees, Kedia said.

U.S. Bancorp earlier in the month pledged to lift its quarterly dividend 4% to 52 cents a share and to continue buying back shares under an existing $5 billion repurchase program.


Write to Dean at dean.seal@wsj.com


(END) Dow Jones Newswires

07-17-25 1154ET