Stock Trading in Green Post Earnings: U.S. Bancorp (NYSE: USB)

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U.S. Bancorp (NYSE: USB) stock rose over 2.3% on 15th October, 2020 (as of 11:03 am GMT-4 ; Source: Google finance) post a decent third quarter of 2020 update. The Average deposits rose 0.6% from the second quarter, and the overall deposit mix continues to be favorable. Non-interest-bearing deposits rose 15.0%, while the time deposits fell 21.7%. The firm closed on the acquisition of $10 billion of deposits from State Farm, which would add to deposit balances and increase liquidity in the fourth quarter. During the third quarter, the firm reported earnings per share of $0.99. The revenue of $6 billion was higher in both the linked quarter and year-over-year basis, boosted by solid fee income performance across a number of business lines.

The Average loans fell 2.2% from the second quarter. In early July, the firm added $1.2 billion in credit card loans. Loans made under the SBA Paycheck Protection Program rose by $2.8 billion on average in the quarter. Average loans declined by 3.5% (excluding the State Farm and PPP loans), hurt by pay downs in the C&I portfolio.

The ratio of non-performing assets to loans and other real estate was 0.41% at the end of the third quarter, from 0.38% at the end of the second quarter. The loan loss provision was $635 million in the third quarter. As of September 30, the common equity Tier 1 capital ratio was 9.4%.

The firm expects its Payments revenue to be adversely affected on a year-over-year basis on the back of fall in consumer and business spend activity. They see non-interest expenses to be relatively stable against the third quarter. Credit quality metrics fall was as expected while the reserve build in the third quarter was limited to the addition related to the acquisition of $1.2 billion of credit card loans from State Farm.

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