U.S. Bancorp Tops Street in 2Q on Real Estate, Mortgage Lending

U.S. Bancorp (NYSE:USB) reported a better-than-expected second-quarter profit as the nation’s fifth largest commercial bank added more mortgage and real estate loans and put more money aside as a precaution against bad debt.

The Minneapolis bank reported net income of $1.4 billion, or 71 cents a share, compared with a year-earlier income of $1.2 billion, or 60 cents.

Excluding one-time items, the bank earned 73 cents, topping average analyst estimates in a Thomson Reuters poll of 70 cents.

Revenue for the three-month period was $5.07 billion, up 8.1% from $4.69 billion, trumping the Street’s view of $4.97 billion. The lender benefited from higher fees as borrowers refinanced homes to take advantage of declining interest rates, doubling the bank's mortgage revenue to $490 million.

New lending activity reached $67.2 billion during the second quarter, led by renewed commercial real estate commitments totaling $36.7 billion and $28.1 billion in mortgage and other retail loans.

The financial services holding company lowered net charge-offs during the latest quarter by 8.9% to $520 million from $571 million last year. Provision for credit losses fell 18% to $470 million on top of an 8% increase in loans to $214.06 billion.

U.S. Bancorp said it expects charge-offs to continue modestly declining into the current quarter.

Net interest income grew 6.6% over the second quarter of 2011, with average earning assets growing 9.3% year-over-year and demand for lower cost core deposit funding rising from the earlier period.

Shares of U.S. Bancorp are up more than 22% so far this year, and ticked slightly higher on Wednesday to $33.08.