U.S. Bancorp Reports 10% Rise in Q3 Net Income to $2.2 Billion as Earnings Beat Forecasts

U.S. Bancorp (NYSE:USB) reported third-quarter 2026 earnings above analysts’ expectations, supported by higher net interest income, stronger fee revenue and growth in its lending portfolio, although total revenue fell slightly short of forecasts.

The US banking group reported adjusted earnings of $1.34 per share for the quarter ended 30 September 2026, exceeding the analyst consensus estimate of $1.32.

Quarterly revenue reached $7.97 billion, compared with expectations of $7.99 billion, representing an 8.7% increase from $7.33 billion in the corresponding period last year.

Net income attributable to U.S. Bancorp rose 10% year-on-year to $2.20 billion, compared with $2.00 billion in the third quarter of 2025.

Shares edged 0.34% higher in pre-market trading following the announcement, reflecting a relatively limited initial market reaction to the results.

Earnings Per Share Increase as Revenue Reaches Record Level

U.S. Bancorp reported diluted earnings per share of $1.34, up 9.8% from $1.22 in the same quarter last year.

The improvement reflected higher revenue across several business activities, including net interest income and fee-generating operations.

Although quarterly revenue missed analysts’ forecasts by approximately $20 million, the bank reported record net revenue of around $8.0 billion.

Gunjan Kedia, Chairman and Chief Executive Officer of U.S. Bancorp, highlighted the group’s financial performance and profitability measures.

“We delivered strong third quarter results. Record net revenue of $8.0 billion drove diluted earnings per share of $1.34, up 10% year-over-year, a return on tangible common equity of 18.5%, and an efficiency ratio of 55.9%,” Kedia said.

The reported return on tangible common equity of 18.5% provided a measure of profitability relative to tangible shareholder capital.

Meanwhile, the efficiency ratio of 55.9% indicated the proportion of revenue absorbed by operating expenses, providing an additional measure of the bank’s cost efficiency.

Net Interest Income and Fee Revenue Support Growth

Revenue growth during the quarter was supported by increases in both net interest income and fee-based activities.

Net interest income rose 5.6% compared with the third quarter of 2025, reflecting improved earnings from the bank’s lending and funding operations.

The net interest margin increased to 2.84%, representing an improvement of nine basis points from the corresponding period last year.

The wider margin indicated that U.S. Bancorp generated a higher net interest return relative to its average interest-earning assets.

Fee revenue increased 14.9% year-on-year, providing another significant contribution to overall revenue growth.

The improvement in fee-based income reflected stronger performance across noninterest revenue activities, including the bank’s capital markets operations.

Together, the increases in net interest income and fee revenue helped lift quarterly revenue by 8.7% despite the modest shortfall against market expectations.

Loan Portfolio Expands as Deposits Increase

U.S. Bancorp reported continued growth in its lending portfolio and deposit base during the third quarter.

Average total loans increased 8.0% year-on-year to $409.5 billion, reflecting expansion in the bank’s lending activities.

Average total deposits rose 2.9% to $526.6 billion compared with the same period last year.

The increase in loans outpaced deposit growth, indicating a faster rate of expansion in lending balances during the period.

The bank also reported an improvement in its net charge-off ratio, which declined to 0.51% from 0.56% in the third quarter of 2025.

The reduction of five basis points indicated a lower level of net credit losses relative to average loans compared with the previous year.

However, the improvement in the charge-off ratio was accompanied by an increase in the provision for credit losses, reflecting additional credit-related expenses recognised during the quarter.

Capital Markets Revenue Rises Following BTIG Acquisition

Capital markets revenue increased substantially during the third quarter, supported by the contribution from U.S. Bancorp’s acquisition of BTIG.

Revenue from capital markets activities rose 69.3% year-on-year to $640 million.

The acquisition contributed to the expansion of the bank’s fee-generating operations, helping support the broader increase in noninterest revenue.

However, the transaction also contributed to higher operating costs.

Noninterest expense increased 7.1% compared with the previous year to $4.49 billion.

The bank attributed the rise primarily to expenses associated with the BTIG acquisition and higher employee compensation costs.

The increase in expenditure partly offset the benefits of stronger revenue, although overall net income still advanced by 10% year-on-year.

Credit Loss Provision Increases to $654 Million

U.S. Bancorp reported a provision for credit losses of $654 million during the third quarter, representing a 14.5% increase compared with the same period last year.

The total included $135 million associated with the purchase of a small business credit card portfolio.

The additional provision contributed to the increase in credit-related expenses, despite the improvement in the bank’s net charge-off ratio.

Credit loss provisions reflect management’s assessment of expected losses within the lending portfolio and can be influenced by changes in loan balances, portfolio composition and economic conditions.

The inclusion of the provision related to the acquired credit card portfolio was an important factor in the year-on-year increase.

The figures showed that U.S. Bancorp continued to recognise additional expected credit losses while reporting a lower rate of realised net charge-offs.

CET1 Capital Ratio Holds at 10.8%

U.S. Bancorp maintained a Common Equity Tier 1 (CET1) capital ratio of 10.8% as of 30 September 2026.

The CET1 ratio is a key regulatory measure of a bank’s financial strength, comparing its highest-quality regulatory capital with risk-weighted assets.

The reported level provided an indication of the group’s capital position following growth in lending balances and the contribution from its acquired operations.

U.S. Bancorp’s third-quarter results reflected stronger profitability, higher lending volumes and expanding fee-based revenue, alongside increased operating expenses and credit loss provisions.

Although revenue narrowly missed analysts’ expectations, adjusted earnings exceeded forecasts, supported by improved net interest margins and contributions from capital markets activities.

Investors will continue to assess the bank’s ability to sustain revenue growth, manage expenses associated with its expanded operations and maintain credit quality as it moves into the final quarter of 2026.

U.S. Bancorp stock price