U.S. Bancorp said profit fell in the third quarter as the biggest US regional lender increased its provisions for credit losses.
(Bloomberg) — U.S. Bancorp said profit fell in the third quarter as the biggest US regional lender increased its provisions for credit losses.
Adjusted earnings came in at $1.05 a share, above the $1 average analyst estimate but below the $1.18 posted in the same period last year, according to a statement from the Minneapolis-based bank Wednesday. Provisions for credit losses increased 42% from a year earlier, to $515 million.
“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,” Chief Executive Officer Andy Cecere said in the statement.
The bank reported results a day after it said it won approval from the Federal Reserve to retain its designation as a Category III bank on promises to shrink its balance sheet and reduce its risk profile, freeing it from more stringent regulations.
The lender, which had $668 billion in assets as of Sept. 30, spent months preparing to comply with the rules associated with becoming a so-called Category II bank, a designation given to banks with more than $700 billion in assets.
A Category II designation would have brought stricter liquidity requirements, an annual rather than biennial company-run stress test, and a more complex methodology for determining its capital requirements. Shares of the company jumped 7% after the announcement Tuesday.
U.S. Bancorp agreed to submit to the stricter regulatory regime as part of its deal for Mitsubishi UFJ Financial Group’s Union Bank. It had previously said it would be able to comply with the more stringent rules by the end of 2024.
Citizens Financial Group, which also reported results on Wednesday, said net interest income fell 9% in the third quarter compared to the year prior, amid lower interest-earning assets.
The bank also outlined progress running off its non-core portfolio, after saying in September it planned to reduce it by about $9.2 billion from $13.7 billion by the end of 2025. In the third quarter, Citizens ran down $1.4 billion toward that goal, it said.
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