Why U.S. Bancorp (NYSE: USB) stock is rising

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U.S. Bancorp (NYSE: USB) stock rose over 3% on July 15th, 2020 (As of 11:44 am GMT-4; Source: Google finance) post decent second quarter of 2020. The group’s Average total loans rose 10% yoy to $28.9 billion driven by better total commercial loans rising 24 % yoy on the back of utilization of bank credit facilities by customers to support liquidity requirements. Average total deposits rose 16.8% yoy to $58.1 billion while Average non-interest-bearing deposits rose 30.1% yoy to $22.0 billion boosted by Corporate and Commercial Banking, Consumer and Business Banking, and Wealth Management and Investment Services. The group’s Average total savings deposits rose 17.6% yoy to $39.7 billion boosted by Corporate and Commercial Banking, Consumer and Business Banking, and Wealth Management and Investment Services. The firm increased its provision for credit losses to $1,737 million due to the current ongoing pandemic, which is a $1,300 million increase in the allowance for credit losses against a $993 million provision for credit losses in the first quarter of 2020.

On the other hand, Net income fell 62.2% yoy to $689 million during the second quarter of 2020. Consequently, Diluted earnings per common share felt to $0.41 in the second quarter of 2020, against $1.09 in the second quarter of 2019 and $0.72 in the first quarter of 2020. The group’s return on average assets of 0.51% while delivered a return on average common equity of 5.3%. The bank’s Nonperforming assets rose to $1,173 million as of June 30, 2020, against $946 million as of March 31, 2020, and $953 million as of June 30, 2019. The ratio of nonperforming assets to loans and other real estate was 0.38 percent at June 30, 2020, against 0.30 percent at March 31, 2020, and 0.33 percent at June 30, 2019. This bad performance was mainly due to rise in total commercial and total commercial real estate nonperforming loans. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III standardized approach fell to 9.05 at June 30, 2020, against 9.5 percent at June 30, 2019.

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