A month has gone by since the last earnings report for U.S. Bancorp (USB). Shares have added about 5.9% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is U.S. Bancorp due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for U.S. Bancorp before we dive into how investors and analysts have reacted as of late.
U.S. Bancorp Q4 Earnings Beat Estimates as NII & Fee Income Rise Y/Y
U.S. Bancorp’s fourth-quarter 2025 earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.19. The bottom line increased 24.7% from the prior-year quarter.
Results benefited from lower expenses and higher non-interest income. Also, a rise in net interest income and a strong capital position were tailwinds. However, a rise in provision was concerning.
Net income attributable to U.S. Bancorp was $2.04 billion, up 22.9% from the prior-year quarter.
In 2025, earnings of $4.62 per share surpassed the consensus estimate of $4.55 and rose from $3.79 in 2024. Net income was $7.6 billion, up 20.2% from the prior-year quarter.
Revenues Rise, Expenses Decline
Total revenues in the reported quarter were $7.36 billion, up 5.1% year over year. The top line beat the Zacks Consensus Estimate by 0.6%.
For 2025, total revenues were $28.54 billion, which marginally missed the Zacks Consensus Estimate of $28.61 billion. The top line rose 4.4% year over year.
Tax-equivalent NII totaled $4.31 billion, up 3.2% from the year-ago quarter. The increase primarily resulted from loan growth and fixed asset repricing.
The net interest margin of 2.77% expanded 6 basis points year over year.
Non-interest income moved up 7.8% year over year to $3.05 billion. The upside was driven by a rise in almost all components.
Non-interest expenses declined 1.9% year over year to $4.23 billion. The decrease was due to lower compensation and employee benefits expenses, partially offset by higher marketing and business development expenses, technology and communications expenses and other expenses.
The efficiency ratio was 57.4%, lower than the year-ago quarter’s 61.5%. A decline in the ratio indicates an improvement in profitability.
Loan & Deposit Balances Increase
Average total loans rose 1.3% to $384.3 billion from the previous quarter.
Average total deposits moved up slightly from the previous quarter to $515.1 billion.
Credit Quality Improves
Total allowance for credit losses was $7.94 billion, down marginally year over year. As of Dec. 31, 2025, U.S. Bancorp’s non-performing assets amounted to $1.59 billion, down 13.2% from the year-ago period.
Net charge-offs were $527 million, down 6.2% from the year-ago quarter.
The provision for credit losses in the reported quarter was $577 million, up 3% from the prior-year quarter.
Capital Ratios Improve
The Tier 1 capital ratio was 12.3% as of Dec. 31, 2025, up from 12.2% in the prior-year quarter. The Common Equity Tier 1 capital ratio under the Basel III standardized approach was 10.8% as of Dec. 31, 2025, up from 10.6% in the year-ago quarter.
The tangible common equity to tangible assets ratio was 6.7%, up from the prior-year quarter’s 5.8%.
Outlook
1Q26
Net interest income on a fully taxable equivalent basis is expected to be in the range of 3–4% year over year.
Total non-interest income is expected to increase 5–6% year over year.
Total non-interest expenses are anticipated to rise by approximately 1% year over year.
FY 2026
Total net revenues are expected to grow 4–6% year over year.
The company anticipates witnessing positive operating leverage of 200 basis points or more.
Medium Term Target (2027)
Return on average assets is anticipated to be 1.15% to 1.35%.
Return on Tangible Common Equity is expected to rise in the high teens.
Fee revenue growth is projected to be in the mid-single digits.
The efficiency ratio is expected to be in the mid-to-high 50s.
The CET1 capital ratio is expected to be 10%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
VGM Scores
At this time, U.S. Bancorp has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise U.S. Bancorp has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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U.S. Bancorp (USB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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