What Is Driving U.S. Bancorp (NYSE: USB) Stock?

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U.S. Bancorp (NYSE: USB) stock rose over 2.5% on April 16th, 2021 (As of 12:28:23 UTC-4 · USD; Source: Google finance) after the company posted mixed results for the first quarter of FY 21. The company has reported net income attributable to U.S. Bancorp of $2,280 million for the first quarter of 2021, which represents 94.7% higher than the $1,171 million for the first quarter of 2020, and 50.1% higher than the $1,519 million for the fourth quarter of 2020. The increase in net income year-over-year was mainly due to lower provision for credit losses, partially offset by lower net interest income and noninterest income in addition to higher noninterest expense.

Net interest income declined 4.9% on a year-over-year tax-equivalent basis, mainly due to the impact of lower rates compared with a year ago and higher premium amortization in the investment portfolio related to mortgage refinancing activities, partially offset by the benefit of deposit and funding mix as well as higher loan fees related to the Small Business Administration (“SBA”) Paycheck Protection Program. Net interest margin contracted from a year ago to 2.50% in the first quarter of 2021 primarily due to the impact of a lower yield curve on earning assets, higher levels of liquidity and higher premium amortization within the investment portfolio, partially offset by the net benefit of deposit repricing and funding composition and higher loan fees. Noninterest income declined 5.7% compared with a year ago, on the back of lower mortgage banking revenue, deposit service charges, securities gains and other noninterest income, partially offset by improvement in trust and investment management fees and commercial products revenue.

Further, net income increased on a linked quarter basis mainly due to lower provision for credit losses, partially offset by lower net interest income and noninterest income. Average total loans for the first quarter of 2021 were $3.7 billion (1.2 percent) lower than the first quarter of 2020. Nonperforming assets were $1,202 million at March 31, 2021, compared to $1,298 million at December 31, 2020, and $946 million at March 31, 2020.

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