US Bancorp, the parent company of IBOS member US Bank, today reported a record net revenue of $5,699m, a record net income of $1,815m and a record diluted earnings per share of $1.06.
Net income attributable to US Bancorp was $1,815 million for Q3 2018, which was 16.1% higher than the $1,563 million for Q3 2017, and 3.7% higher than the $1,750 million for Q2 2018. Diluted earnings per common share were $1.06 in Q3 2018, compared with $0.88 in Q3 2017 and $1.02 in Q2 2018.
The increase in net income year-over-year was largely due to total net revenue growth of 2.4% partially offset by non-interest expense growth of 1.5%. Net interest income increased 2.4% (1.7% on a taxable-equivalent basis), mainly a result of the impact of rising interest rates, earning assets growth, and higher yields on reinvestment of securities, partially offset by higher rates on deposits and funding mix.
Non-interest income increased 3.3% compared with a year ago, driven by strong growth in payment services revenue, trust and investment management fees, and other non-interest revenue, partially offset by decreases in mortgage banking revenue and commercial products revenue. Non-interest expense increased 1.5% primarily due to increased compensation expense related to supporting business growth and compliance programs, merit increases, and variable compensation related to revenue growth, higher employee benefits expense, and higher technology and communications expense in support of business growth.
Net income increased on a linked quarter basis primarily due to total net revenue growth of 1.0% and a decrease in non-interest expense of 1.3%. The increase in total net revenue reflected an increase in net interest income of 1.7% due to the impact of rising interest rates, earning assets growth, and an additional day in the third quarter, partially offset by higher rates on deposits and funding mix.
Net interest income on a taxable-equivalent basis in Q3 2018 was $3,281 million, an increase of $54 million (1.7%) over Q3 2017. The increase was principally driven by the impact of rising interest rates, earning assets growth, and higher yields on securities, partially offset by lower spread due to loan mix, higher rates on deposits and funding mix shift as well as the impact of tax reform which reduced the taxable-equivalent adjustment benefit related to tax exempt assets and higher interest recoveries in the prior year quarter (Q2 2018).
Net interest income on a taxable-equivalent basis increased $55 million (1.7%) on a linked quarter basis primarily driven by the impact of higher interest rates on assets, earning asset growth, and an additional day in the third quarter, partially offset by deposits and funding mix shift.
Below are US Bank’s Q3 2018 financial highlights:
- Net income of $1,815 million and diluted earnings per common share of $1.06
- Industry leading return on average assets of 1.58% and return on average common equity of 15.5%
- Return on tangible common equity of 19.9%
- Returned 78% of 3Q earnings to shareholders through dividends and share buybacks
- Year-over-year positive operating leverage with net revenue increase of 2.4% and non-interest expense increase of 1.5%
- Net interest income grew 2.4% year-over-year (1.7% on a taxable-equivalent basis) and 1.7% linked quarter on both a reported and tax-equivalent basis
- Total non-interest income grew 3.3% year-over year
- Payment services revenue grew 7.1%
- Trust and investment management fees increased 8.2%
- Nonperforming assets decreased 19.7% on a year-over-year basis and 8.0% on a linked quarter basis
Read the full press release, via US Bank, here.