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U.S. Bancorp’s USB first-quarter 2025 adjusted earnings per share (excluding the impacts of notable items) of $1.03 beat the Zacks Consensus Estimate of 99 cents. The bottom line increased 14.4% from the prior-year quarter.
Results have benefited from lower expenses and higher non-interest income. Also, a rise in net interest income (NII) and strong capital position were tailwinds. However, a decline in deposits was concerning.
Net income (GAAP basis) attributable to U.S. Bancorp was $1.72 billion, up 29.6% from the prior-year quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
USB’s Revenues Rise, Expenses Decline
Total revenues in the reported quarter were $6.96 billion, up 4% year over year. The top line beat the Zacks Consensus Estimate by 0.6%.
Tax-equivalent NII totaled $4.12 billion, up 2.7% from the year-ago quarter. The increase primarily resulted from the mix of earning assets, fixed asset repricing and modest loan growth, partially offset by the deposit mix.
The net interest margin of 2.72% expanded 2 basis points year over year.
Non-interest income moved up 5% year over year to $2.84 billion. The upside was driven by higher payment services revenues, trust and investment management fees, and other revenues.
Non-interest expenses declined 5.1% year over year to $4.23 billion. The fall was due to lower compensation and employee benefits, and notable items in the prior-year quarter. Excluding notable items in the prior year quarter, non-interest expenses in the first quarter of 2025 increased 0.9% from the first quarter of 2024.
The efficiency ratio was 60.8%, lower than the year-ago quarter’s 66.4%. A decline in the ratio indicates an improvement in profitability.
U.S. Bancorp’s Loan Balance Rises & Deposit Declines
Average total loans increased 0.9% to $379 billion from the previous quarter. Average total deposits declined 1.1% from the previous quarter to $506.5 billion.
USB’s Credit Quality: Mixed Bag
Total allowance for credit losses was $7.92 billion, up marginally year over year. As of March 31, 2025, U.S. Bancorp’s non-performing assets amounted to $1.73 billion, down 3.3% from the year-ago period.
Net charge-offs were $547 million, up 12% from the year-ago quarter.
The provision for credit losses in the reported quarter was $537 million, down 2.9% from the prior-year quarter.
U.S. Bancorp’s Capital Ratios Improve
The Tier 1 capital ratio was 12.4% as of March 31, 2025, up from 11.6% in the prior-year quarter. The Common Equity Tier 1 capital ratio under the Basel III standardized approach was 10.8% as of March 31, 2025, up from 9.9% in the year-ago quarter.