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U.S. Bancorp on Tuesday said it carved out nearly $1 billion in reserves for the first quarter — more than twice the usual amount — to cover potential defaults from the economic shock brought on the COVID-19 pandemic.
The move by the Minneapolis-based bank — following similar steps yesterday by financial institutions like JPMorgan Chase and Wells Fargo & Co., dealt a blow to its bottom line. U.S. Bank (NYSE: USB) posted net income of $1.17 billion, or 72 cents per share, down from $1.69 billion, or $1 per share, in the same period a year ago.
Revenue climbed 3.5 percent to $5.77 billion. Net interest income, which accounts for the majority of the bank’s revenue, dropped 1.2 percent year-over-year to $3.2 billion. Non-interest income was up more than 10 percent year-over-year to $2.5 billion.
Shares of U.S. Bancorp were down 7 percent to $33.15, in morning trading.
CEO Andy Cecere said in an investor call he expects the bank to maintain its dividend schedule even though the bank halted its share buyback.
“Even if the economic downturn persisted through most of the year we believe we can maintain our dividend,” he said.
The bank maintained a relatively optimistic view overall.
“The economic fallout from the COVID-19 pandemic is causing financial hardship to many in this country,” Cecere said in a statement. “Our capital and liquidity positions are strong, and we stand ready to help businesses access programs like the Paycheck Protection Program and Main Street Lending Program.”
U.S. Bank is the sixth-largest public company headquartered in Minnesota with roughly $26 billion in revenue. Overall, the bank has roughly 73,000 employees companywide and roughly 14,000 in Minnesota.