U.S. Bancorp shares sink as loan growth seen as drag on third quarter net interest income

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U.S. Bancorp shares sink as loan growth seen as drag on third quarter net interest income
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U.S. Bancorp (NYSE: USB ) was the worst-performing stock in the S&P 500 on Wednesday after comments from management at an industry conference disappointed investors.

President, Chairman and CEO Andy Cecere and Senior Executive Vice President and Chief Financial Officer John Stern presented at the Barclays (LON: BARC ) Global Financial Services Conference at 09:00 ET (13:00 GMT).

During the presentation, Stern indicated that the bank expects third quarter net interest income to be a little below the midpoint of the range of $4.2 billion to $4.4 billion. Stern cited tepid loan growth along with deposit pricing for the weakness in third quarter NII.

Stern explained, "tepid loan growth that we see, as well as some deposit pricing, and that will translate into a 2.80% net interest margin is what we would approximate for the third quarter. And that will be about 10 basis points or so lower than the previous quarter."

Stern’s outlook for the fourth quarter was more constructive.

“So I mentioned net interest margin down a little bit, given some of the loan and deposit things that we talked about. We would anticipate perhaps a little bit more of that in the fourth quarter, but not nearly as much as what we saw in the third quarter and particularly, bottoming out from that standpoint,” said Stern.

Discussing the macro picture, Cecere said, “what we're seeing is consistent with what you're hearing from other banks, which is the consumer remains strong. So from a spend level, from a deposit level by strata, from a credit quality standpoint, all a little bit better than pre-COVID levels, but all starting to trend towards normalization.”

Shares of U.S. Bancorp declined 4% following the presentation.

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