US BANCORP \DE\ (USB) Q1 2025 Earnings Summary

Executive Summary

Q1 delivered EPS of $1.03, ROA 1.04%, ROTCE 17.5%, and 270 bps of positive operating leverage (adjusted), with NIM ticking up to 2.72% and CET1 rising 20 bps to 10.8% .
Results vs. Street: EPS beat, revenue missed on S&P Global basis; EPS $1.03 vs $0.97 est., revenue $6.39B vs $6.91B est. (S&P Global methodology differs from FTE “net revenue”) [GetEstimates]*.
Mix and operating discipline drove YoY revenue growth (+3.6%) and efficiency (60.8%), while credit stayed stable (NCO ratio 0.59%) and allowance-to-loans was 2.07% .
2Q25 guidance: NII (TE) “$4.2B or lower,” noninterest income ~ $2.9B, opex $4.1–$4.2B, and ≥200 bps positive operating leverage; FY25 guidance maintained for +3–5% adjusted revenue growth and ≥200 bps operating leverage .
Strategic catalysts: payments transformation (Elavon moved to #5 US acquirer), expense programs, and a clear medium-term NIM path toward 3% in 2026–2027 (macro dependent) .

What Went Well and What Went Wrong

What Went Well
- Efficiency and leverage: Third consecutive quarter of positive operating leverage (270 bps, adjusted) on disciplined expenses and fee momentum; management emphasized “revenues outpacing expenses” and strong risk management .
- Capital and credit: CET1 +20 bps QoQ to 10.8%; NCO ratio improved 1 bp QoQ to 0.59%, allowance-to-loans 2.07%, with CRE office “appropriately reserved” and selective reserve release on improved mix .
- Payments/product execution: Launched Spend Management and Business Essentials; introduced Shield Visa (0% intro APR for 24 cycles), and Elavon rose to #5 acquirer in the US, strengthening the payments narrative .
What Went Wrong
- Top-line seasonality: Linked-quarter total net revenue -0.7% (TE basis), with NII down 1.3% due to fewer days and deposit seasonality; payment services fee revenue also declined QoQ (card -8.1%) .
- S&P revenue miss: On S&P’s “Revenue” basis, Q1 came in below consensus (methodology gap vs FTE makes headline optics tougher despite core momentum) [GetEstimates]*.
- Deposit mix headwinds persist: Noninterest-bearing deposits fell 3.9% QoQ and 6.0% YoY on averages, continuing to pressure funding mix even as paid rates eased .

Financial Results

Core P&L and profitability

Metric	Q1 2024	Q4 2024	Q1 2025
Total Net Revenue (FTE) ($MM)	$6,715	$7,009	$6,958
Net Interest Income (FTE) ($MM)	$4,015	$4,176	$4,122
Noninterest Income ($MM)	$2,700	$2,833	$2,836
Diluted EPS ($)	$0.78	$1.01	$1.03
Net Income to USB ($MM)	$1,319	$1,663	$1,709
ROA (%)	0.81	0.98	1.04
ROTCE (%)	15.1	17.4	17.5
Efficiency Ratio (%)	66.4	61.5	60.8
NIM (FTE, %)	2.70	2.71	2.72

Balance sheet and credit KPIs

Metric	Q1 2024	Q4 2024	Q1 2025
Avg Loans ($MM)	$371,070	$375,655	$379,028
Avg Deposits ($MM)	$503,061	$512,313	$506,534
Net Charge-off Ratio (%)	0.53	0.60	0.59
ACL / Period-end Loans (%)	2.11	2.09	2.07
CET1 (Standardized, %)	10.0	10.6	10.8

Segment net income

Segment Net Income ($MM)	Q1 2024	Q4 2024	Q1 2025
Wealth, Corp., Commercial & Institutional	$1,126	$1,273	$1,171
Consumer & Business Banking	$469	$427	$398
Payment Services	$236	$211	$340
Treasury & Corporate Support	($512)	($248)	($200)
Consolidated USB	$1,319	$1,663	$1,709

Results vs S&P Global Consensus (methodology per S&P; “Revenue” differs from FTE “Total net revenue”)

Metric	Q1 2024	Q4 2024	Q1 2025
EPS – Actual vs Est. ($)	0.78 vs 0.88 est. [miss]*	1.07 vs 1.05 est. [beat]*	1.03 vs 0.97 est. [beat]*
Revenue – Actual vs Est. ($MM)	6,132 vs 6,655 est. [miss]*	6,419 vs 6,992 est. [miss]*	6,391 vs 6,906 est. [miss]*

Values with asterisks retrieved from S&P Global (consensus/actual on S&P basis).*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Income (TE)	2Q25	—	~$4.2B or lower	New
Noninterest Income	2Q25	—	~ $2.9B	New
Noninterest Expense	2Q25	—	$4.1B–$4.2B	New
Positive Operating Leverage (YoY, adj.)	2Q25	—	≥200 bps	New
Total Net Revenue (adj.) Growth	FY25	+3% to +5%	+3% to +5%	Maintained
Positive Operating Leverage (adj.)	FY25	≥200 bps	≥200 bps	Maintained
Common Dividend per share	Ongoing	$0.50 (recent run-rate)	$0.50 declared for 7/15/25	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2025)	Trend
NIM path to 3%	Medium-term 3% target; fixed asset repricing + mix; curve shape key	3% achievable in 2026–2027; $5–7B/qtr fixed loan repricing + $3B/qtr securities; curve matters; hedges NII-neutral	Improving trajectory; macro-dependent
Expense discipline	5 quarters flat (adj.) into 4Q; 200+ bps leverage target	6 quarters discipline; 270 bps adjusted leverage; 4 in-flight programs (real estate, simplicity, AI/automation, location)	Sustained; structural
Payments transformation	Organization changes, leadership hires; tech-led MPS up YoY in 4Q	Focus on affluent, Elan expansion, CA opportunity; Elavon #5 US acquirer; redeploying saves to sales/marketing	Execution ramping
Capital & buybacks	CET1 10.6%; modest initial buybacks; pacing toward ~10% Cat II CET1	CET1 10.8%; $100M buybacks; pacing “modest,” targeting ~10% CET2 incl. AOCI over time	Building; cautious pacing
Macro/tariffs & credit	Stable credit; watch CRE office; deposit beta moderation	Small reserve release; adding qualitative reserves for tariff uncertainty; NCOs stable QoQ	Cautious but stable
Consumer spending	—	Weather-driven early Q1 dip; stabilized by late March; affluent tilt supports steady spend	Stabilizing

Management Commentary

“We reported EPS of $1.03 and delivered a return on tangible common equity of 17.5%... third consecutive quarter of year-over-year growth in revenues outpacing expenses... asset quality and capital levels are strong.” — CEO Gunjan Kedia .
“Small reserve release of $10 million... CET1 increased 20 bps to 10.8%... Tangible book value per share was $25.64.” — CFO John Stern .
“We will achieve 3% NIM over the medium term (2026 or 2027), driven by fixed asset repricing and funding optimization; curve shape and loan growth pace will influence timing.” — CFO John Stern .
“We are committed to building a vibrant payments franchise... with focus on affluent customers, interconnectivity, and tech-led merchant processing.” — CEO Gunjan Kedia .

Q&A Highlights

NIM trajectory: Mechanical uplift from fixed loan/securities repricing (150–200 bps on $5–7B loans and ~$3B securities rolling per quarter); curve slope and deposit costs drive pace; hedge book largely NII-neutral .
Capital returns: Buybacks to remain modest near term; aspire to ~10% CET1 on Cat II basis including AOCI; ramp repurchases as capital targets are achieved and macro clarity improves .
Payments growth: Target mid-single-digit fee growth for Payments over time; tech-led and vertical focus to strengthen growth; weather and prepaid exit weighed near term .
Expenses: Multiple levers (real estate, automation, org simplification); management will flex reinvestment to sustain ≥200 bps positive operating leverage even if revenue softens .
Macro/consumer: Early Q1 weather impact, then normalization; watching tariff headlines; qualitative reserves added .

Estimates Context

S&P Global consensus vs. reported (S&P basis): Q1 2025 EPS beat ($1.03 vs $0.97 est.), revenue miss ($6.39B vs $6.91B est.); Q4 2024 EPS slight beat, revenue miss; Q1 2024 miss on both [GetEstimates]*.
Implications: Street models likely lift EPS on operating efficiency and stable credit, but may temper revenue trajectories given mix/seasonality and S&P revenue definition vs. bank’s FTE net revenue.
Values with asterisks retrieved from S&P Global.*

Key Takeaways for Investors

Efficiency-led operating leverage is durable: six quarters of expense discipline and 270 bps adjusted positive operating leverage position USB to out-earn peers if revenue is volatile .
NIM has identifiable mechanical tailwinds (repricing/mix); path to ~3% by 2026–2027 is credible, with upside if curve steepens and deposit costs ease faster .
Capital trajectory remains supportive (CET1 10.8%); buyback pacing stays prudent near term, but growing headroom supports incremental returns as macro clarifies .
Payments transformation is a multi-year upside lever; Elavon’s #5 ranking and new SMB offerings (Spend Management, Business Essentials) enhance cross-sell and fee durability .
Credit is stable with adequate reserves; CRE office remains contained within appropriately reserved buckets and overall NCOs are steady .
Watch near-term optics: On S&P’s basis, revenue misses may mask underlying FTE net revenue strength and NIM expansion; expect focus on 2Q guide execution and fiscal-year leverage delivery [GetEstimates]*.
Catalysts: continued NIM progression, Payments fee momentum rebound post-seasonality, sustained ≥200 bps leverage, and clearer buyback cadence into 2H.

Appendix: Additional Detail

Why EPS beat and revenue (S&P) missed: EPS benefited from expense control, stable credit, and TE-adjusted NIM expansion, while S&P revenue classification tends to exclude TE adjustment and may differ from bank-reported “Total net revenue,” creating an optical shortfall despite solid TE net revenue [GetEstimates]*.
Q/Q drivers: Fewer days and deposit seasonality reduced NII; mortgage banking and capital markets fees offset weaker card seasonality; NIM improved on lower average earning assets .
Tax rate: Effective tax rate 20.5% in Q1 (TE 21.6%); broadly stable vs prior periods .

Notes: All figures in USD. Company results are on a taxable-equivalent (TE) basis where cited as such. Values with asterisks are retrieved from S&P Global (consensus and S&P-defined actuals).*