USB Q2 Earnings Beat on Higher NII & Non-Interest Income, Stock Down

U.S. Bancorp’s USB second-quarter 2025 earnings per share of $1.11 beat the Zacks Consensus Estimate of $1.07. The bottom line increased 13.3% from the prior-year quarter.Results benefited from lower expenses and higher non-interest income. Also, a rise in net interest income (NII) and a strong capital position were tailwinds. However, a decline in deposits and loans was concerning. Its shares declined 4% in the pre-market trading session on these concerns.Net income (GAAP basis) attributable to U.S. Bancorp was $1.82 billion, up 13.2% from the prior-year quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)USB’s Revenues Rise, Expenses DeclineTotal revenues in the reported quarter were $7 billion, up 2% year over year. The top line missed the Zacks Consensus Estimate by 0.8%.Tax-equivalent NII totaled $4.08 billion, up marginally from the year-ago quarter. The increase primarily resulted from fixed asset repricing, loan mix and lower rates paid on interest-bearing deposits, partially offset by lower noninterest-bearing deposit balances.Net interest margin of 2.66% contracted 1 basis point year over year.Non-interest income moved up 3.9% year over year to $2.92 billion. The upside was driven by a rise in almost all components except corporate payment products revenues, mortgage banking revenues, and net losses in securities.Non-interest expenses declined marginally year over year to $4.18 billion. The fall was due to a decline in almost all components except marketing and business development costs, technology and communications expenses, and other costs. Further, adjusted non-interest expenses declined marginally from the prior year quarter.The efficiency ratio was 59.2%, lower than the year-ago quarter’s 61%. A decline in the ratio indicates an improvement in profitability.U.S. Bancorp’s Loan & Deposit Balances DeclineAverage total loans decreased 0.1% to $378.5 billion from the previous quarter. Average total deposits declined 0.7% from the previous quarter to $502.9 billion.USB’s Credit Quality ImprovesTotal allowance for credit losses was $7.86 billion, down roughly 1% year over year. As of June 30, 2025, U.S. Bancorp’s non-performing assets amounted to $1.68 billion, down 9.3% from the year-ago period.Net charge-offs were $554 million, up 3% from the year-ago quarter.The provision for credit losses in the reported quarter was $501 million, down 11.8% from the prior-year quarter.U.S. Bancorp’s Capital Ratios ImproveThe Tier 1 capital ratio was 12.3% as of June 30, 2025, up from 11.9% in the prior-year quarter. The Common Equity Tier 1 capital ratio under the Basel III standardized approach was 10.7% as of June 30, 2025, up from 10.2% in the year-ago quarter.The tangible common equity to tangible assets ratio was 6.1%, up from the prior-year quarter’s 5.4%.Our Take on USBU.S. Bancorp’s solid business model and diverse revenue streams are likely to keep aiding its financials in the upcoming period. An improving NII looks encouraging. Going forward, USB is well-positioned to deliver solid returns on tangible common equity and positive operating leverage.U.S. Bancorp Price, Consensus and EPS Surprise U.S. Bancorp price-consensus-eps-surprise-chart | U.S. Bancorp QuoteCurrently, U.S. Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of USB’s Peer BanksThe Bank of New York Mellon Corporation’s BK second-quarter 2025 adjusted earnings of $1.94 per share surpassed the Zacks Consensus Estimate of $1.74. Also, the bottom line reflected a jump of 28% from the prior-year quarter.Results were primarily aided by a rise in fee revenues and NII. Also, the company recorded a provision benefit in the quarter, which was a tailwind. Growth in assets under custody and/or administration (AUC/A) and assets under management (AUM) balances further supported results. However, higher expenses were an undermining factor for BK. State Street’s STT second-quarter 2025 adjusted earnings of $2.53 per share surpassed the Zacks Consensus Estimate of $2.36. The bottom line also increased 17.7% from the prior-year quarter.STT’s results were aided by growth in fee revenues. Also, the company witnessed improvements in total AUC/A and AUM balances. However, higher adjusted expenses, a jump in provisions and lower NII acted as spoilsports.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Bank of New York Mellon Corporation (BK): Free Stock Analysis Report State Street Corporation (STT): Free Stock Analysis Report U.S. Bancorp (USB): 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