U.S. Bancorp (USB) stock experienced a pre-market plunge of 5.21% on Thursday, following the bank's fourth-quarter earnings report that showed a mixed performance and raised concerns about its net interest income (NII) outlook.
The bank reported adjusted earnings per share of $1.07, narrowly beating analyst estimates of $1.05. However, its revenue of $6.98 billion slightly missed expectations. While U.S. Bancorp's profitability metrics remained strong, with a return on tangible common equity of 18.3% and a return on average assets of 1.03%, the market's reaction was likely driven by its NII forecast for the first quarter.
U.S. Bancorp predicted that its NII would be "relatively stable" in the first quarter, amid expectations of sluggish loan growth and heightened competition for deposits as interest rates decline. This outlook, coupled with PNC Financial Services Group's projection of a 2% to 3% sequential decline in NII, raised concerns among investors about the potential impact on regional banks' earnings in the coming months.
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