U.S. Bancorp Forecasts Higher 2Q Expenses, Peak in Compliance Costs

U.S. Bancorp in Minneapolis said it expects noninterest expense to increase in the second quarter due in part to compliance and marketing costs.

The $422 billion-asset company also disclosed in a slide tied to its appearance at a conference hosted by Barclays that seasonality will contribute to a 4% linked-quarter increase in noninterest expense.

Still, U.S. Bancorp said compliance costs should "peak" in the quarter. The company also said it expects to incur "elevated" branding costs in the quarter.

The company, which did not provide any details on specific costs, is working through consent orders tied to mortgages and anti-money-laundering compliance.

John Pancari, an analyst at Evercore, wrote in a note to clients that analysts overall had been projecting a 1.3% increase in expenses. He added that the disclosure could prompt him to lower his quarterly earnings estimate by 4%, or 3 cents a share.

U.S. Bancorp also said it expects a "modest" increase in net interest income that would reflect 1.5% loan growth in the quarter and a "relatively stable" net interest margin. Mortgage fees should increase 10% to 20% on seasonally high volume. Credit quality metrics should be "relatively stable," the company said.