U.S. Bancorp Stock Gains as Q3 Earnings Beat on NII, Fee Income Growth

U.S. Bancorp’s USB third-quarter 2025 earnings per share of $1.22 beat the Zacks Consensus Estimate of $1.11. The bottom line increased 18.4% from the prior-year quarter.

USB shares rose roughly 1.5% in the pre-market trading session following the earnings release.

Results benefited from lower expenses and higher non-interest income. Also, a rise in net interest income (NII) and a strong capital position were tailwinds. However, a rise in provision was concerning. 

Net income attributable to U.S. Bancorp was $2 billion, up 16.6% from the prior-year quarter.

USB’s Revenues Rise, Expenses Decline

Total revenues in the reported quarter were $7.33 billion, up 6.8% year over year. The top line beat the Zacks Consensus Estimate by 2.4%.

Tax-equivalent NII totaled $4.25 billion, up 2% from the year-ago quarter. The increase primarily resulted from fixed asset repricing, loan mix and lower rates paid on interest-bearing deposits.

The net interest margin of 2.75% was relatively stable compared with the year-ago period.

Non-interest income moved up 14.1% year over year to $3.08 billion. The upside was driven by a rise in almost all components.

Non-interest expenses declined 2% year over year to $4.19 billion due to lower compensation and employee benefits expenses, partially offset by higher technology and communications expenses and other expenses. 

The efficiency ratio was 57.2%, lower than the year-ago quarter’s 60.2%. A decline in the ratio indicates an improvement in profitability.

U.S. Bancorp’s Loan & Deposit Balances Increase

Average total loans rose slightly to $379.2 billion from the previous quarter. Average total deposits moved up 1.8% from the previous quarter to $511.8 billion.

USB’s Credit Quality Improves

Total allowance for credit losses was $7.89 billion, down marginally year over year. As of Sept. 30, 2025, U.S. Bancorp’s non-performing assets amounted to $1.65 billion, down 10.4% from the year-ago period.

Net charge-offs were $536 million, down 4.9% from the year-ago quarter.

The provision for credit losses in the reported quarter was $571 million, up 2.5% from the prior-year quarter.

U.S. Bancorp’s Capital Ratios Improve

The Tier 1 capital ratio was 12.4% as of Sept. 30, 2025, up from 12.2% in the prior-year quarter. The Common Equity Tier 1 capital ratio under the Basel III standardized approach was 10.9% as of Sept. 30, 2025, up from 10.5% in the year-ago quarter.

The tangible common equity to tangible assets ratio was 6.4%, up from the prior-year quarter’s 5.7%.

Our Take on USB

U.S. Bancorp’s diversified revenue streams, solid balance sheet, and disciplined cost control continue to support its strong financial performance. Growth in NII and non-interest income, coupled with improved efficiency, bodes well for future profitability. Although provisions rose modestly, USB remains well-positioned to deliver steady returns on tangible common equity and maintain positive operating leverage in the upcoming quarters.

U.S. Bancorp Price, Consensus and EPS Surprise

U.S. Bancorp price-consensus-eps-surprise-chart | U.S. Bancorp Quote

Currently, U.S. Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates & Expectations of Bank Stocks

Bank of Hawaii BOH is scheduled to announce third-quarter 2025 numbers on Oct. 27. 

Over the past seven days, the Zacks Consensus Estimate for BOH’s quarterly earnings has been unchanged at $1.13 per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Huntington Bancshares Inc. HBAN is slated to report third-quarter 2025 results on Oct. 17.
 
Over the past seven days, the Zacks Consensus Estimate for HBAN’s quarterly earnings has been unchanged at 38 cents per share.

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This article originally published on Zacks Investment Research (zacks.com).

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