U.S. Bancorp brought in nearly $1.5 billion in net income during the fourth quarter of 2019 to end the year with just shy of $23 billion in revenue. The company indicated a 70 percent increase in fourth-quarter mortgage banking revenue, year-over-year.
The bank’s fourth-quarter earnings represent a 19.9 percent drop from the more than $1.8 billion it posted in the fourth quarter of 2018 and a 22.1 percent dip compared with the $1.9 billion the company saw in the third quarter of 2019.
The decline in profits year-over-year stemmed from lower total net revenue of 2.8 percent and an increase in noninterest expense of 3.7 percent, the report states.
“As our fourth quarter financial results indicate we ended 2019 on a good note and we enter a new year, and a new decade, in a strong position,” U.S. Bancorp Chairman, CEO and President Andy Cecere said in the report. “Our focus on value creation supported continued customer acquisition and deepening of existing relationships across our franchise, which in turn drove strong account and volume growth in our fee businesses and strong loan and deposit growth in our banking businesses.”
The report primarily credits the bank’s fourth-quarter increase in noninterest income to higher mortgage banking revenue, driven by higher production and gain on sale margins.
“Total noninterest expense in the fourth quarter of 2019 increased $56 million (4.3 percent) primarily due to higher net shared services expense, reflecting the impact of technology development and investment in infrastructure supporting business growth, as well as costs to manage the business and higher production incentives in support of business growth,” the report states. “Partially offsetting these increases were lower FDIC assessment costs. The provision for credit losses increased $24 million (35.3 percent) primarily due to an unfavorable change in the reserve allocation, partially offset by lower net charge-offs.”
The company recorded $244 million in mortgage banking revenue in the fourth quarter, a 70 percent jump from the $171 million brought in during the same period the year before but a drop from the $272 million it saw in the third quarter of 2019.
The bank touted the fact that it returned $2.9 billion in earnings to shareholders through dividends and an expanded share buyback program.
“We remain committed to delivering best-in-class products and services and this coming year we will continue to enhance our digital capabilities aimed at improving the customer experience and making it simpler and more productive to do business with us,” Cecere said. “I want to thank our employees for all their hard work in building the solid foundation from which we will grow in 2020 and beyond.”