Shares of U.S. Bancorp  USB rose 4.7% as third-quarter 2024 earnings per share of $1.03 surpassed the Zacks Consensus Estimate of $1. Results benefited from lower non-interest expenses.

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U.S. Bancorp Price, Consensus and EPS Surprise

 

U.S. Bancorp price-consensus-eps-surprise-chart | U.S. Bancorp Quote

Decrease in Non-Interest Expenses Aids USB’s Results

U.S. Bancorp’s non-interest expenses declined 7.2% year over year to $4.20 billion in the third quarter of 2024. The fall was due to lower other non-interest expenses. Excluding notable items from the prior year, non-interest expenses fell 1%.

Likewise, Citizens Financial Group CFG and Wells Fargo & Company WFC witnessed declines in non-interest expenses in the third quarter of 2024.

CFG’s non-interest expenses decreased 2.6% year over year to $1.26 billion, whereas WFC’s non-interest expenses edged down marginally to $13.1 billion.

Other than a decline in non-interest expenses, USB’s capital ratio improved.

U.S. Bancorp’s Tier 1 capital ratio was 12.2% as of Sept. 30, 2024, up from 11.2% in the prior-year quarter. The Common Equity Tier 1 capital ratio under the Basel III standardized approach was 10.5%, up from 9.7%.

The tangible common equity to tangible assets ratio was 5.7%, up from the prior-year quarter’s 5%.

Revenue Decline Dampens USB’s Q3 Performance

Total revenues were $6.83 billion, down 2.4% year over year. The top line missed the Zacks Consensus Estimate of $6.88 billion. Declines in net interest income (NII) and non-interest income adversely impacted the top-line performance.

The tax-equivalent NII was $4.17 billion, down 2.4% from the year-ago quarter. The downside was primarily caused by the impacts of higher interest rates on deposit mix and pricing.

Non-interest income moved down 2.4% to $2.69 billion. This was due to the net loss on the sale of securities, decreased service charges and lower other revenues.

Declines in NII and non-interest income hurt U.S. Bancorp’s bottom line, which saw a 1.9% year-over-year dip.

U.S. Bancorp’s credit quality deteriorated during the quarter. As of Sept. 30, 2024, non-performing assets were $1.85 billion, jumping 41.1% from the year-ago period. The increase resulted from higher commercial and commercial real estate non-performing loans.

Total allowance for credit losses was $7.93 billion, up 1.8% year over year. Net charge-offs were $564 million, up from $420 million in the year-ago quarter. The provision for credit losses in the reported quarter was $557 million, up 8.2% from the prior-year quarter.