US Bancorp Stock (USB): Why The Price Went Down Today – Pulse 2.0

Written by Amanda
  • The stock price of US Bancorp (NYSE: USB) fell by over 4% pre-market today. This is why it happened.

The stock price of US Bancorp (NYSE: USB) fell by over 4% pre-market today. Investors are responding negatively to the company’s fourth-quarter 2021 results.

These are the highlights:

— Net income of $1,673 million and diluted earnings per common share of $1.07 for 4Q21 (down from $2,028 million from Q3 2021)

— Return on average assets of 1.16% and return on average common equity of 13.0% for 4Q21

— Net revenue decline driven by lower mortgage banking revenue, partially offset by higher trust and investment management fees 

— Strong deposit growth supported related investment portfolio and cash balance strategies to optimize asset sensitivity going into 2022.

While dilutive to NIM, this was a net benefit to net interest income.

This elevated liquidity drove NIM to decline 6 basis points while lower Paycheck Protection Program “PPP” loan fees accounted for 6 basis points decline

— Net charge-off ratio of 0.17% in 4Q21 compared with 0.20% in 3Q21 and 0.58% in 4Q20

— Average total loans grew 2.0% on a linked quarter basis

— Full year net income of $7,963 million and diluted earnings per common share of $5.10

— Full year average earning assets growth of 5.1%

— Full year average total deposits growth of 8.9%

— CET1 capital ratio increased to 10.0% at December 31, 2021, compared with 9.7% at December 31, 2020

The net income decreased on a linked quarter basis primarily due to lower net interest income, mainly due to lower loan fees related to the SBA Paycheck Protection Program, and lower noninterest income, primarily due to seasonally lower payments and capital markets revenues and lower mortgage banking revenue as refinancing continued to decline. And noninterest expense increased and the provision for credit losses was higher due to reductions in the allowance for credit losses in the third quarter of 2021. 


“The value of our diversified business model was evident in 2021 results. Credit quality continues to be particularly strong with our net charge-off ratio at a historical low of 17 basis points in the fourth quarter. We experienced solid loan growth from new business originations and increased line utilization. Deposit growth was very strong this quarter increasing $18.4 billion or 4.3% compared with the third quarter, which supported our loan growth and provided the opportunity for investment strategies that were both accretive to fourth quarter net interest income and maintains asset sensitivity for future growth in a rising rate environment. As we start a new year, we are encouraged by the momentum building in each of our lines of business. The investments we have made in our digital transformation and payments ecosystem initiatives will continue to enable customer and revenue growth and we expect continued momentum in customer spend activity and loan growth. In the fourth quarter we closed on the acquisition of TravelBank, providing tech-led expense and travel management solutions for mid-size companies, and the PFM acquisition, which increases assets under management. I want to thank our U.S. Bank employees for all they do, and we are looking forward to welcoming Union Bank employees to our team when we close on the acquisition later this year.” 

— Andy Cecere, Chairman, President and CEO, U.S. Bancorp

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.

Source: pulse2.com

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