• Earnings Per Share (EPS): $1.03 for the first quarter.
• Return on Tangible Common Equity: 17.5%.
• Operating Leverage: Positive operating leverage of 270 basis points year-over-year on an adjusted basis.
• Net Charge-Off Ratio: Improved modestly this quarter.
• Fee Income: Represents 41% of total net revenue.
• Payments Business Loan Balances: $42 billion in average loan balances.
• Total Purchase Volumes: $925 billion for the trailing 12-month period.
• Common Equity Tier 1 (CET1) Capital Ratio: Increased 20 basis points to 10.8%.
• Tangible Book Value Per Share: $25.64 at March 31, up 13.8% year-over-year.
• Total Average Deposits: Decreased 1.1% to $507 billion.
• Average Loans: $379 million, a modest increase of 0.9% on a linked quarter basis.
• Net Interest Income: $4.12 billion on a fully taxable equivalent basis.
• Non-Interest Income: $2.8 billion, an increase of 5.0% year-over-year.
• Non-Interest Expense: $4.2 billion, stable with adjusted non-interest expense in the fourth quarter.
• Non-Performing Assets Ratio: 0.5% at March 31.
• Allowance for Credit Losses: $7.9 billion or 2.07% of period-end loans.
• Share Repurchases: Completed $100 million during the quarter.
• Second Quarter 2025 Guidance: Net interest income expected to be $4.1 billion to $4.2 billion; non-interest income approximately $2.9 billion; non-interest expense $4.2 billion or lower.
• Full Year 2025 Guidance: Total net revenue growth estimated to be 3% to 5% compared to 2024; positive operating leverage greater than 200 basis points for the full year.

Release Date: April 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• U.S. Bancorp (USB, Financial) reported earnings per share of $1.03 and a return on tangible common equity of 17.5% for the first quarter.
• The company achieved year-over-year positive operating leverage of 270 basis points on an adjusted basis.
• USB's credit quality and capital levels are strong, with an improved net charge-off ratio and continued capital building.
• The company has a diversified mix of fee-generating businesses, with fee income representing 41% of total net revenue.
• USB's payments business is a key growth area, with $42 billion in attractive average loan balances and a focus on affluent customers.

Negative Points

• The macroeconomic environment remains uncertain, with ongoing discussions around tariffs and potential impacts on the business.
• USB's total average deposits decreased by 1.1% on a linked quarter basis, reflecting seasonal patterns and pricing discipline.
• The company's net interest income was relatively stable compared to the fourth quarter, indicating limited growth in this area.
• Non-interest income was impacted by seasonal declines in Payment Services and less favorable market conditions for Trust and Investment Management fees.
• USB's Merchant Acquiring business, while a differentiator, contributes just over 5% of total revenue and is undergoing a multiyear transformation.

Q & A Highlights

Q: John, can you elaborate on the ideal interest rate environment for U.S. Bancorp? A: John Stern, CFO, explained that the bank prefers a neutral interest rate risk position on the balance sheet. Ideally, an upward sloping curve would be beneficial, with lower short-end rates helping funding positions and higher long-term rates aiding fixed asset repricing.

Q: What are the conditions needed for U.S. Bancorp to return to a 70%-80% return of earnings to shareholders through buybacks and dividends? A: John Stern stated that as the bank approaches a 10% capital level on a Category II basis, they anticipate increasing share repurchases. The 70%-80% return of earnings is consistent with their long-term strategy.

Q: Can you provide an update on the expected balance between net interest income (NII) and fees for the full year revenue growth target? A: John Stern confirmed no change to the 3%-5% revenue growth guidance. He emphasized confidence in mid-single-digit fee growth, driven by payments, capital markets, and trust and investment management, despite market uncertainties.

Q: How is U.S. Bancorp addressing consumer spending patterns amid economic uncertainty? A: Gunjan Kedia, CEO, noted a modest pullback in consumer spending early in the year due to weather, which stabilized by March. The bank's focus on affluent customers and non-discretionary spending has resulted in steady consumer spend patterns.

Q: What are the strategic priorities for U.S. Bancorp's payments business? A: Gunjan Kedia highlighted the focus on building a vibrant payments franchise, targeting affluent customers, and expanding in key markets like California. The bank aims to align with market volumes while maintaining margins, leveraging payments to anchor client relationships.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.