Higher NII & Non-Interest Income to Aid U.S. Bancorp's Q3 Earnings

U.S. Bancorp USB is scheduled to report third-quarter 2025 results on Oct. 16, 2025, before the opening bell. The company is expected to have witnessed year-over-year increases in quarterly revenues and earnings.In the second quarter, U.S. Bancorp benefited from lower expenses, higher non-interest income and a rise in net interest income (“NII”).USB has an impressive earnings surprise history. Its earnings beat estimates in the trailing four quarters, the surprise being 2.93%, on average.U.S. Bancorp Price and EPS Surprise U.S. Bancorp price-eps-surprise | U.S. Bancorp QuoteFactors Influencing U.S. Bancorp’s Q3 PerformanceNII: The Federal Reserve implemented a 25-basis point (bps) interest rate cut near the end of the third quarter of 2025. This is unlikely to have a negative impact on USB’s NII as the yields remained high for most of the quarter, while funding costs are likely to have stabilized.Management expects NII for the third quarter of 2025 to be in the range of $4.1-$4.2 billion.The consensus estimate for NII is pegged at $4.13 billion, indicating a 2% increase from the prior quarter’s reported figure.Loans: Despite uncertainties surrounding tariff policies, lending activity remained strong in the second quarter, supported by improving macroeconomic clarity. Per the Federal Reserve’s latest data, the demand for commercial and industrial loans and commercial real estate loans was notably strong. As a result, USB’s lending activity is expected to have seen a decent improvement.The Zacks Consensus Estimate of $616.6 million for average earning assets indicates a marginal sequential increase.Non-Interest Income: The third quarter witnessed heightened market volatility and client activity because of uncertainty related to President Trump’s tariff plans. Also, volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange.In the third quarter of 2025, trading volumes across equity derivatives and corporate bonds exhibited growth, reflecting heightened market activity and investor engagement. The Zacks Consensus Estimate for capital markets revenues is pegged at $396.7 million, indicating an increase of 1.7% from the prior quarter’s reported figure.Despite interest rate cuts by the central bank in Sept. 19, mortgage rates did not come down significantly. The third quarter saw rates fluctuate, but they remained in the mid-to-upper 6% range. Hence, refinancing activities and origination volume were decent. Thus, U.S Bancorp's mortgage banking fees are likely to have seen some improvement.The Zacks Consensus Estimate for mortgage banking revenues is pegged at $167.1 million, which indicates a 3.1% increase from the prior quarter’s reported figure. The consensus mark for income from card revenues is pegged at $444.4 million, indicating a marginal rise from the prior quarter’s reported figure.The Zacks Consensus Estimate for trust and investment management fees is pegged at $711.9 million, indicating a rise of 1.3% from the prior quarter’s reported figure.Overall, the consensus estimates for total non-interest income is pegged at $2.98 billion, indicating a sequential rise of 1.9%.  Management expects total non-interest income to be $3 billion in the third quarter of 2025.Expenses: Higher costs related to compensation, employee benefits and net occupancy are expected to have kept the expense base elevated in the third quarter. Yet, the company’s focus on prudent expense management is likely to have offset the increase.Management projects adjusted total non-interest expenses to be $4.2 billion or lower in the third quarter of 2025. Also, it anticipates a positive operating leverage of more than 200 bps.Asset Quality: The company is likely to have set aside a decent amount of money for potential bad loans, given the expectations of a potential two-rate cuts this year, signalled by the Fed and an improving economic clarity.The Zacks Consensus Estimate for non-performing loans is pegged at $1.70 billion, indicating a rise of 4% from the prior quarter’s reported figure.What the Zacks Model Unveils for USBPer our proven model, the chances of U.S. Bancorp beating estimates this time are high.  The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is exactly the case here, as you can see below. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Earnings ESP: U.S. Bancorp has an Earnings ESP of +1.22%.Zacks Rank: USB currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for third-quarter earnings of $1.11 has been unchanged in the past seven days. The figure indicates an increase of 7.8% from the year-ago reported number.The consensus estimate for third-quarter 2025 revenues is pegged at $7.16 billion, indicating a rise of 4.7% from the year-ago reported figure.Other Stocks to ConsiderHere are a couple of other bank stocks that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this time around.The Earnings ESP for First Horizon Corporation FHN is +1.20% and it carries a Zacks Rank #2 at present. The company is slated to report third-quarter 2025 results on Oct. 15.Over the past seven days, the Zacks Consensus Estimate for FHN’s quarterly earnings has been unchanged at 45 cents per share.Truist Financial TFC is scheduled to announce third-quarter 2025 results on Oct. 17. The company has a Zacks Rank #3 at present and an Earnings ESP of +0.68%.Quarterly earnings estimates for TFC have remained unchanged at 98 cents per share over the past week.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. 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Click to get this free report U.S. Bancorp (USB): Free Stock Analysis Report First Horizon Corporation (FHN): Free Stock Analysis Report Truist Financial Corporation (TFC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks