$U.S. Bancorp(USB)$ is expected to release its quarterly earnings result for fiscal Q1 2025 on 16 April 2025 before the market open.
The consensus estimate for the quarterly revenues is expected to come in $6.92 billion, which would represent an increase of 3.6% from same period one year ago.
The earnings per share consensus estimate is expected at $0.98 per share, this would represent a year-over-year change of +10%.
US Bancorp (USB) Last Neutral Earnings Call Saw Its Share Price Decline By 24.06%
USB had a neutral earnings call on 16 Jan 2025 and saw its share price decline by 24.06%, that is a significant decline.
The earnings call highlighted solid revenue growth, successful capital management, and improved operational efficiency. However, notable expense items, challenges in merchant acquiring, and uncertain loan growth present some concerns.
US Bancorp (USB) Guidance On 2025 Revenue Growth
During the U.S. Bancorp Fourth Quarter 2024 Earnings Call, executives provided detailed guidance focusing on several key financial metrics. The company reported a diluted earnings per share of $1.01, or $1.07 when adjusted for notable items, with net revenue reaching $7 billion for the quarter and $27.5 billion for the year. U.S. Bancorp highlighted a 190 basis point increase in positive operating leverage year-over-year on an adjusted basis, driven by effective balance sheet management and diversified fee business offerings. The CET1 capital ratio improved by 10 basis points to 10.6%, while the tangible book value per share increased by 10.4% to $24.63. For the first quarter of 2025, the company expects stable net interest income, excluding the impact of fewer days, and stable noninterest expenses around $4.2 billion.
Full-year 2025 guidance anticipates total revenue growth of 3% to 5% on an adjusted basis, with positive operating leverage of greater than 200 basis points.
The company remains focused on prudent expense management, asset repricing benefits, and modest capital distributions, including an initial $100 million in share repurchases.
Key Considerations for USB's Future Earnings
Merchant acquiring yield contracted by 70 basis points year-over-year due to growth in higher volume, lower margin clients.
Interest Rate Environment: The Federal Reserve's monetary policy will heavily impact net interest margin (NIM). Higher rates could boost interest income if USB manages deposit costs effectively, but prolonged hikes might pressure borrowers and credit quality.
Net revenue totaled $7 billion for the quarter and $27.5 billion for the year, driven by growth in net interest income and noninterest income. Achieved 190 basis points of positive operating leverage on an adjusted basis year-over-year.
CET1 capital ratio increased 10 basis points to 10.6%. Tangible book value per share increased by 10.4% to $24.63. Initiated $100 million in share repurchases.
Loan Growth and Credit Quality: Loan demand (especially in commercial real estate, mortgages, and consumer lending) and credit loss provisions will be critical. Economic slowdowns or recessions could increase defaults, affecting profitability.
Improved credit quality with a modest loan loss reserve release. Nonperforming assets to loans ratio was stable at 0.48%, and net charge-off ratio remained flat at 0.60%. Modest loan growth expectations for 2025, with no immediate signs of significant pickup in lending demand.
Fee Income: USB's non-interest income (e.g., payment services, wealth management) will depend on economic activity and market conditions. A downturn could reduce fees from card transactions or investment services.
Fee income represented over 40% of total net revenue, with double-digit year-over-year fee growth in commercial products, trust and investment management, and investment product revenues.
Expense Management: USB has emphasized cost-cutting initiatives, including branch optimization and digital investments. Efficiency ratios will reflect success in balancing expenses with revenue growth.
Fourth quarter included $109 million of notable expense items, including $60 million related to operational efficiency initiatives and $49 million from lease impairments. Expected deposit betas to increase to mid- to high 40s in Q1 2025, with continued competitive pressures impacting deposit costs.
Regulatory and Competitive Pressures: Capital requirements, compliance costs, and competition from fintechs/peers (e.g., PNC, Truist) could influence margins.
Delivered an 18.3% return on tangible common equity and improved efficiency ratio of 59.9% in the fourth quarter.
US Bancorp (USB) Price Target
Based on 18 Wall Street analysts offering 12 month price targets for US Bancorp in the last 3 months. The average price target is $53.91 with a high forecast of $63.00 and a low forecast of $43.50. The average price target represents a 41.13% change from the last price of $38.20.
If we were to look at how USB have progressed over the years, the acquisition of Union Bank (completed in late 2022) expanded USB's West Coast presence but added integration costs.
There are also economic Conditions like GDP growth, unemployment, and inflation trends which could derail USB price target, so it will depend on USB execution on synergies which would focus on the Post-Union Bank integration and cost savings.
If USB could perform in its digital adoption which success in attracting deposits and reducing overhead through tech investments could help.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at how USB stock price have moved recently, we can see that RSI is showing momentum build up as investors sentiment begin to come back with fellow banks positive earnings performance.
But we need to see USB share price break through the sideway trading which the bulls could continue to break through for a daily uptrend.
I think we will need to watch how USB share repurchases would proceed, and also USB might adjust the 2025 revenue growth guidance.
Summary
While USB’s scale and diversification position it to navigate challenges, its Q1 2025 results will ultimately depend on both external economic forces and internal execution.
The current economic uncertainity might have USB adjust its 2025 revenue growth.
Appreciate if you could share your thoughts in the comment section whether you think USB would proceed with its share repurchases and how much would the 2025 revenue growth adjust.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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