U.S. Bancorp (NYSE:USB) just took a hitits stock dropped 6.6% this morning after its Q4 earnings report failed to impress. While net income nearly doubled year-over-year to $1.67 billion, the bank's adjusted earnings per share came in at $1.07. Revenue climbed 3.7%, with noninterest income jumping 8.1%, thanks to a strong showing in trust and investment management fees. But higher funding costs and a net interest margin slipping to 2.71% cast a shadow over the results.
The concern? Expenses. Noninterest costs climbed 2.5% from last quarter, hitting $4.31 billion. The bank is pushing operational efficiency, but lease impairments and strategic spending are eating into its bottom line. Adding to the pressure, U.S. Bancorp's provision for credit losses rose 9.4% year-over-year, a sign of ongoing stress in commercial real estate and credit card loans. Investors weren't having it.
Despite the rough market reaction, management is staying upbeat. CEO Andy Cecere pointed to a solid capital position, with a CET1 ratio of 10.6%, and confidence in delivering "industry-leading returns on tangible common equity." He's betting on growth in wealth management and payment services to drive future gains. But with cost pressures and economic uncertainty looming, investors are watching closely to see if the bank can turn momentum back in its favor.
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