Dive Brief:
- U.S. Bank reported a 10% jump in profit Wednesday for 2021's fourth quarter, to $1.67 billion from the $1.52 billion the Minneapolis-based lender reported for the same period in 2020.
- The bank also reported a total allowance for credit losses of $6.16 billion for Q4 2021, down substantially from the $8 billion U.S. Bank had cached in Q4 2020, in the early days of the pandemic when banks were wary of large-scale loan defaults.
- Deposit growth was also strong during the three-month period ending Dec. 31, up 4.3% over the prior quarter and 8.9% year over year.
Dive Insight:
“The value of our diversified business model was evident in 2021 results,” Andy Cecere, U.S. Bank's CEO, said Wednesday. “Credit quality continues to be particularly strong with our net charge-off ratio at a historical low of 17 basis points in the fourth quarter. We experienced solid loan growth from new business originations and increased line utilization."
Despite the boost in profit, the bank’s net interest income declined — to $3.12 billion for Q4 2021, from $3.2 billion in 2020's fourth quarter.
At the same time, noninterest income dipped 5.9%, and noninterest expenses rose 3% in the past three months. Fourth-quarter total net revenue declined 3.5% over the prior quarter, cut down by lower mortgage banking revenue.
Still, fourth-quarter profit climbed year over year because of a lower provision for credit losses. U.S. Bank clung to its reserves for longer than competitors like JPMorgan Chase, Citi and Bank of America: The bank did not release any of its loan-loss reserves in Q4 2020.
The bank announced plans to acquire PFM Asset Management in July — a deal that closed in the fourth quarter as more than 250 employees joined the bank from the Philadelphia-based company.
The bank's "other" acquisition — the $8 billion plan to buy MUFG Union Bank, which it announced in September, still awaits approval amid a regulatory climate increasingly unfriendly to large bank deals.
Cecere said he is confident the deal could close “later in the first half” of 2022, followed by a systems conversion late in the third quarter or early in the fourth, American Banker reported.
The acquisition is expected to give the bank about 1 million new customers on the West Coast and add $133 billion in assets.
