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U.S. Bancorp Stock Price: Quote, Forecast, Splits & News (USB)

Perplexity Finance

Company Profile

U.S. Bancorp Price & Performance (USB)

Stock Performance

Updated Apr 28, 7:40 PM UTC

U.S. Bancorp

$40.09USD

+$0.17 (+0.41%)

Open

$40.12

Market Cap

$62.45B

Year High

$53.98

High

$40.39

P/E Ratio

9.9

Year Low

$35.18

Low

$39.78

Dividend Yield

4.96%

Volume

3.39M

Latest News

Earnings Momentum Continues as U.S. Bancorp Beats Q1 Expectations
Apr 27, 2025
U.S. Bancorp reported $7 billion in first-quarter revenue, a 3.6% increase from last year, while cutting expenses by over 5%. Earnings per share surpassed analyst forecasts, and the company reaffirmed its 2025 growth outlook. New CEO Gunjan Kedia highlighted a focus on client relationships and payments transformation amid ongoing leadership changes.123
Credit Quality Improves for U.S. Bancorp Despite Economic Uncertainty
Apr 24, 2025
U.S. Bancorp saw year-over-year improvement in consumer card delinquencies and a modest uptick in payments-related loans. Management emphasized strong credit and capital positions, with the net charge-off ratio improving to 0.59%. The bank continues to invest in technology and payments, targeting growth in key sectors like retail and healthcare.45
Analysts Remain Optimistic on U.S. Bancorp’s Upside Potential
Apr 27, 2025
Wall Street analysts maintain a 'moderate buy' consensus for U.S. Bancorp, projecting a nearly 27% upside over the next year. Despite mixed recent stock performance, the bank’s fundamentals and dividend yield remain attractive. Price targets have been adjusted, with forecasts ranging from $41 to $50.5 per share.678

What's Happening

Peers

Earnings

Report Date

Apr 16, 2025

Reported Revenue

Beat +0.72%

Avg 1d Change

4.25%

Report Period

Q1 2025

Reported EPS

Beat +5.21%

Implied Move 1d

3.48%

Transcript

10m 53s

You, George, and good morning, everyone. As we begin the call today, I want to first take a moment to acknowledge the loss of our friend and colleague, Terry Dolan, who most recently served as our chief administration officer. We have truly appreciated the outpouring of support we have received from the investment community since this tragic passing last month and our thoughts remain with his friends and family. If I could turn your attention to slide three, In the first quarter, we reported earnings per share of $1.03 and delivered a return on tangible common equity of 17.5%. We are pleased with the progress we have made on our strategic priorities and achieved year over year positive operating leverage of two seventy basis points this quarter on an adjusted basis. Our continued discipline on expenses good momentum across our fee businesses and modest margin expansion all contributed to us achieving our third consecutive quarter of revenues outpacing expenses on an adjusted basis. Importantly, our credit quality and capital levels are strong. This quarter, our net charge off ratio improved modestly we continued to build capital. We are in an environment of intense market and economic volatility, However, our management team has successfully navigated through a wide range of conditions over the years and we are prepared for a variety of possible scenarios.

12m 39s

Our consistent and deep culture of risk management will continue to be a competitive advantage as we go forward. Slide four is a snapshot of U. S. Bancorp today. As the largest non GSIB bank in the country, we operate at considerable scale in the markets we serve. Our franchise is quite unique Fee income represents 41% of total net revenue and is driven by an extensive and diversified product set. Today, two thirds of our businesses operate nationally through an optimized digital and physical distribution model Our client franchise of almost 15,000,000 clients has strong loyalty and depth with us. These advantages are important to our unique and ongoing growth story. I'll turn you to Slide five, As I step into my role as Chief Executive Executive Officer of U. S. Bancorp, I want to reaffirm my commitment to our medium term targets. The macroeconomic backdrop has shifted since our Investor Day in September and I acknowledge that there is still considerable uncertainty to the outlook However, a wide range of plausible forward looking macroeconomic scenarios still support our targets. I have three immediate strategic priorities to achieve our goals. Tightly manage our expenses, drive organic growth across our business and transform our payments business.

14m 24s

It is important to emphasize that while we are focused on organic growth, we remain deeply committed to high returns and a disciplined risk management culture. Slide six gives you more color on our expense management program. We have been actively focused on reducing expenses since early twenty twenty four. Our investment spend has stabilized and is increasingly shifting to growth oriented investments. In addition, we are structurally driving productivity through all our operations. As the chart on the left shows, we have now delivered six consecutive quarters of expense discipline on an adjusted basis. This has been an important funding mechanism for organic growth and a significant driver of the positive operating leverage we have delivered. On the right, are our four expense programs. These are well underway. These initiatives are designed to improve sustainable productivity and balance that with high quality client service and operating effectiveness. Notably, we have additional levers we can pull and are watching the revenue environment closely to appropriately balance and flex our expense programs. On slide seven, our diversified mix of fee generating businesses is truly a competitive advantage for us. On the left, we are disaggregating the dynamics of our fee growth last year.

16m 3s

Confidence in our medium term fee growth targets is supported by the strength we have in our core businesses like trust and investment management and capital markets fee businesses as well as the execution momentum we have across our other organic growth initiatives. Headwinds around consumer fees and the sale of of our ATM cash provisioning business are also dissipating. And support stronger fee growth going forward. We are focused on leveraging a broad range of products and digital capabilities to deepen relationships with our clients and expand our reach through partnerships.

16m 43s

I'll move to slide eight We have an opportunity to do better with our payments businesses. Money movement capabilities are critical to anchoring client relationships and we are committed to building a vibrant payments franchise. Our payments business drives both fee income as well as net interest income with $42,000,000,000 in attractive average loan balances. Net interest income is an important part of our payment story. And as you can see on the left, we have grown our average loan balances in line with or better than the industry. Our loan growth has benefited from a range of competitive products that offer quite attractive value proposition, especially to borrowers. Total purchase volumes across all of our payments businesses were at $925,000,000,000 this quarter. For the trailing twelve month period. The growth here could be stronger and our target is to be more in line with the market. We have a greater focus on the affluent customer and products like BankSmartly were designed specifically to target the segment. As I look ahead, with two new leaders in place since the start of the new year, we are actively redeploying expense saves scale up our execution our sales and marketing efforts and payments.

18m 19s

Some areas of focus are California, where our acquisition of Union Bank has given us access to a large and affluent consumer and small business base, and the expansion of our Elon franchise, which currently serves over 1,200 financial institutions across The U. S. Finally, while our merchant acquiring business contributes just over 5% of total U. S. Bank revenue. It is a unique part of our portfolio and I know one that garners a lot of attention from the investment community as it is a key differentiator for the company. Are in the middle of a multiyear transformation here to reposition this business in three ways. The first is greater interconnectivity across the bank. The second is a sharper focus on five industry verticals, and the third is a strategic shift to a tech led operating model that is more consistent with the buying behavior of consumers today. Tech led represents over one third of total merchant processing revenue and most of our revenue generation is now concentrated in our five targeted verticals. We have most recently moved up to number five in Nielsen's 2025 report ranking for processing volume and we do have more room to grow here.

19m 49s

Our medium term fee growth targets for the overall bank expect a mid single digit growth rates for payments. With more upside beyond that timeframe. Finally, before I hand it over to John, I want to highlight a simpler management structure on Slide nine. We are very fortunate to have a deep management bench and I'm confident we will execute with urgency on our priorities. Now let me turn the call over to John who will provide more detail on the quarter as well as forward looking guidance.

20m 28s

Thanks Gunjan. You turn to slide 10, I'll start with some highlights for the quarter followed by a discussion of first quarter earnings trends. In the first quarter, we reported earnings per share of $1.03 with year over year top line revenue growth and disciplined expense management. On the right hand side of this slide, can see that most credit quality metrics and capital levels improved both sequentially and year over year. This quarter a more favorable portfolio mix and improved asset quality resulted in a small reserve release of $10,000,000 The allowance this quarter also included some some incremental qualitative reserves to reflect increased tariff induced macroeconomic uncertainty. Our loan portfolio is well diversified. And we are appropriately reserved and prepared for a wide range of potentially adverse macroeconomic conditions. Our CET1 capital ratio increased 20 basis points to 10.8% this quarter as we continue to balance ongoing capital accretion with modest share repurchases. Our tangible book value per share was $25.64 at March 31, up 13.8% year over year. Slide 11 provides key performance metrics. Our return on average assets and net interest margin improved linked quarter, from solid financial performance continued expense discipline, and efficient balance sheet management.

21m 58s

Slide 12 provides a balance sheet summary. Total average deposits decreased 1.1% on a linked quarter basis to $5.00 $7,000,000,000 in line with seasonal patterns and continued prioritization of relationship based deposits and pricing discipline. Both our mid-40s cumulative deposit beta and percentage of non interest bearing to total deposits of approximately 16% remain in line with expectations. Average loans totaled $379,000,000,000 a modest increase of 0.9% on a linked quarter basis driven by commercial lending initiatives that were partially offset by higher pay downs within our commercial real estate and portfolio and continued runoff of auto loans.

22m 44s

At March 31, the ending balance on our investment portfolio was flat. At 171 basis. Billion dollars This quarter, the average yield across both our investment portfolio and loan book were impacted by lower short end rates. Which more than offset the benefits of fixed asset repricing and improved asset mix. Turning to Slide 13. Net interest income on a fully taxable equivalent basis totaled $4,120,000,000 relatively stable to the fourth quarter after adjusting for two fewer days as expected. Slide 14 highlights trends in non interest income. Non interest income totaled $2,800,000,000 an increase of 5% on a year over year basis driven by payments, and trust and investment management fees. Linked quarter revenue was impacted by seasonal declines in payment services and other revenue while our decline in trust and investment management fees resulted from less favorable market conditions. Turning to slide 15. Non interest expense for the quarter totaled $4,200,000,000 stable with adjusted non interest expense in the fourth quarter and consistent with our previous guidance. Continued expense discipline and operational efficiencies partially offset seasonal increases in performance based incentives and merit as well as a higher charitable foundation contribution. Slide 16 highlights our credit quality performance on a linked quarter and year over year basis.

24m 17s

Our ratio of non performing assets to loans and other real estate was 0.45% at March 31. Improvement from the previous quarter and a year ago. The first quarter net charge off ratio of 0.59 improved one basis point linked quarter, and our allowance for credit losses totaled $7,900,000,000 or 2.07% of period end loans at March 31. On slide 17, our common equity Tier one capital ratio 20 basis points to 10.8%. As of March 31 net of distributions. Our CET1 ratio including AOCI was 8.8%. During the quarter, we completed $100,000,000 of share repurchases and moving forward we expect the level and pace of buybacks to remain modest as we balance continued capital accretion with distributions and further evaluate broader macroeconomic conditions. Turning to slide 18. We We wanted to provide some additional clarity on our projected balance sheet trajectory and the drivers of net interest margin expansion. These drivers are supportive of our medium term target. As the slide shows, we do not expect to become a Category two bank before 2027. Further, we expect that our trajectory will benefit from an improved asset mix fixed asset repricing, and continued optimization of our funding mix. The timing and ultimately where we land within the range provided will depend on several factors including the path of interest rates and loan growth.

25m 53s

Moving to slide 19. Our first quarter results met the guidance we provided in mid January. We are monitoring the ongoing discussions around tariffs and recognize that uncertainties remain. I'll now provide second quarter and full year 2025 forward looking guidance based on our current expectations. Starting with the second quarter twenty twenty five guidance, we expect net interest income for the second quarter on a fully taxable equivalent basis to be in the range of $4,100,000,000 to $4,200,000,000 Total non interest income is expected to be approximately $2,900,000,000 We expect total non interest expense to be $4,200,000,000 or lower in the second quarter and we expect to deliver positive operating leverage in the second quarter of 200 basis points or more on a year over year adjusted basis. I'll now provide full year 2025 guidance, which is consistent with our previous guidance. Total net revenue growth on an adjusted basis is estimated to be in the range of 3% to 5% compared to the full year 2024. We expect to achieve positive operating leverage of greater than 200 basis points for the full year. Slide 20 shows that we have made measurable progress toward achieving our medium term targets.

27m 15s

Compared to the first quarter of twenty twenty four, we have improved both our profitability and efficiency ratios and have continued to enhance our capital positioning and operating leverage trajectory. We have more work to do, but we are pleased with our progress to date. I'll now hand it back over to Gunjan for closing remarks.

27m 35s

Thank you, John. Let me close on slide 21. I am excited to lead our exceptional bank into the future. Over the last two years, we have been focused on integrating our Union Bank franchise and then swiftly building back capital after the banking failures of 2023. We are now focused on organic growth. And our momentum on expenses is timely as we navigate a highly uncertain environment and that gives us strategic flexibility. Moving forward, my top priority is to restore investor confidence in our story, and our execution. Finally, on behalf of our U. S. Bank team, I want to sincerely thank Andy Seseri for his forty plus years of thoughtful, dedicated and steady leadership. We all wish Andy well in his retirement. With that, we will now open the call for questions.

28m 54s

Our first question comes from Gerard Cassidy from RBC Capital Markets.

29m 3s

Gunjan and John, before I ask my question, on behalf of all of the bank analysts and the investment community, I really want to offer our sincere condolences about Terry's tragic death. Not only will he be missed by his family and all his colleagues at US Bancorp, he'll be missed by everybody on this call, throughout the investment community. All of us will keep him and his family in our thoughts and prayers. On on the question, John, can you go back to your comments about the yields in the portfolios how you referenced that the earning asset yields came down for the quarter. And you pointed out I think on Slide 12 in your comments that the impact of lower short term rates more than offset the benefits of the repricing of fixed rate assets What's the ideal interest rate environment for U. S. Bancorp in your view?

30m 4s

Sure, Gerard. And first of all, you for those comments. They mean a lot, and we appreciate that very much. On to your question on the yields, within the portfolio and ideal positioning and things like that. Just more from a technical standpoint, investment portfolio about half of the AFS book or about just over a quarter of the book in total is floating rate in nature. Of course, we have that a lot of hedges in place to protect from from shocks on higher rates to protect capital in that sense. So that's the positioning for it. That positioning along with how we manage the rest of the balance sheet provide us how we think about interest rate sensitivity and how we want to position the bank from interest rate shock. So today, even though the investment portfolio has some mix towards floating rate, we have other things that can offset that such as receive fixed swaps on the commercial loans as an example. And so when you put it all together, we have a what we'd like to have is a neutral interest rate risk position on the balance sheet neutral to shocks. Now ideally we would like to see a more upward slope ing curve that will be more beneficial to us.

31m 28s

Lower short end rates would help our funding position. And longer term rates will help with the repricing of our fixed rate So those are kind of the puts and takes as we think about the balance sheet.

31m 42s

I appreciate that John. And then as a follow-up, you talked about your capital levels, your CET1 ratios, especially including the AOCI at 8.8, which of course is well above your required level. And you're still being cautious on the buybacks Historically, as you all know, you folks have traditionally given back 70% to 80% of annual earnings and buybacks and dividends. What kind of environment will we need to see for you guys to be comfortable to get back into that kind of 70 to 80% return of earnings to shareholders and buybacks and dividends?

32m 22s

Sure. So I think as we talked about at Investor Day, we talked about our capital ratio and where it needs to be. We targeted approximately 10% on a category two basis basis, which you just cited that the ratio where we're at right now And we still are awaiting capital rules and things like that. Obviously, there's more favorability there with the regulatory environment. But we are as we get closer we would anticipate that we would increase our share repurchases as we approach and achieve that approximately that 10% capital level. And the numbers that you cite that 70%, 80% that's that's a number that we provided to you on a full payback in our Investor Day and that is consistent with our thinking.

33m 12s

Great. And Andy, good luck in retirement. I wish you a lot of future success.

33m 17s

Thank you.

33m 19s

Thanks, Gerard. Next question comes from Scott Siefers from Piper Sandler. Please go ahead. Your line is open.

33m 27s

Good morning, everyone. Thanks for taking the question. I guess, first of all, I'd echo Gerard's sentiments and thoughts as well. Maybe John, within the 3% to 5% full year revenue growth target, any change in of the expected balance between NII and fees? I know you'd talked previously about sort of mid single digit fee growth aspiration for the year.

33m 48s

So maybe just within your response, we could sort of speak to any updates on main fee drivers throughout the year like a particular emphasis on the payments momentum? That you would see developing, if possible.

34m 2s

Sure. So thanks, Scott. First of all, you're right, no change to our guidance. 3% to 5% is our expectation. We see and we acknowledge of course that the market is is uncertain. There's things in the tariff discussions that everyone is watching. We acknowledge that. But we still feel good about our revenues and our ability to execute. On the net interest income side, we shared a slide in terms of how we see a path of how net interest margin will grow and that's starts with fixed asset repricing and better mix in terms of our loan book. On the fee side of things, we still believe the mid single digit is appropriate way to think about fee growth for the year. Gunjan commented on the payment side of things and we have good initiatives beyond that as well as in other parts like capital markets and trust and investment management and all these other sorts of things. And then importantly, know you didn't ask, but expense we have a lot of levers there as well, which will help us achieve operating leverage that we have talked about in terms of 200 basis points or more for the full year.

35m 11s

So we understand the market has changed, but our our clients are resilient and we have a lot of confidence in our ability to execute.

35m 20s

Okay, perfect. Thanks for that. And then maybe sort of a top level one. Can you all sort of address what you're seeing in terms of some of the consumer spending patterns? Mean, for your size, just given the payments business, see sort of an outsized amount of spending. Just curious what changes, if any, you've seen since this all this uncertainty really ramped up? If there's been any change in particular since early April when when things really began to, to hit it in a bigger way.

35m 51s

Scott, let me start there. We saw a modest pullback in consumer spending early in the year and that was very weather related. And it has stabilized towards the March. We are watching the downward trend in consumer sentiment, but not seeing that in our spend patterns Our mix does tilt towards the more affluent customer and towards non discretionary everyday spend patterns. So that could be an explanation. But we are seeing steady consumer spend patterns in the first quarter.

36m 33s

Perfect. All right. Thank you both for all the color.

36m 36s

Thank you, Scott.

36m 39s

Our next question comes from John McDonald from Truist Securities. Please go ahead. Your line is open.

36m 46s

Gunjan, wanted to ask you a little bit bigger picture on the payments business.

36m 50s

You've acknowledged it's been a little bit disappointing relative to what you see as its potential. Did we collectively have too high expectations for payments the last couple of years? Or it a question of needing to get further along in this shift towards the tech enabled order to better align you know, the business with the industry dynamics.

37m 11s

Good morning, John. It is a very good question.

37m 16s

It's not anchoring too high. The industry is quite attractive. Way we manage our business is quite focused on margins. So I think the right way to think about our personal aspirations is to have a very nice balance of margin and growth. What we are seeing here is that the balance sheet side, the NII side of the payments business is actually very attractive and it is tracking with the industry And our product offerings historically have been quite attractive for the borrower segment. So we like that. We want to continue that. We are leaning in on also the affluent transactor segment with a new lineup of products that is attractive to them. So we can also augment our fee growth. So our expectation would be that we would be in line with the on volumes and we'll maintain our margin and it will be a very healthy accretive sort of trajectory for the overall payments business for us. And then of course, I always want to remind you that the reason we are in the payments is not because it's a standalone attractive business. It's a very very attractive product to anchor our client relationships across all banking products.

38m 28s

So So that's sort of our expectation for payments.

38m 32s

Okay, great. And then John, a question on expenses. You can put this in the category of no good deed goes uncriticized. You've done a great job keeping quarterly expenses flat for a bunch of quarters in a row now. You just remind us why that still enables you to invest enough to play offense against some aggressive payments competitors and a bunch of offense minded banks that are expanding throughout the country.

38m 56s

Well, think the beauty of our expense programs is we've been able to take a lot of the savings that we've had and invested in and continue to invest John, we talked at Investor Day about how our investment has over the years has gone more from defense in building out all the infrastructure needed to more offense or more two thirds offense versus one third defense when we think about our CapEx levels which is in that kind of $1,250,000,000 we have OpEx and tech or total tech amount in that kind of that $2,000,000,002,500,000,000 on an annual basis. And so we continue to invest all the products and capabilities that Gunjan has been talking about. And so we feel really good about the levers that we have and that's been part of our plan is to take savings and continue to invest and and be offensive minded about it.

39m 54s

Okay. Thank you.

39m 57s

Our next question comes from Betsy Graseck from Morgan Stanley. Please go ahead. Your line is open. Thank you. And I also thank you, Gerard, for saying that and team, I will always remember Terry's big smile and warm embrace. And Andy, so all the best for you. In your retirement, and I hope you enjoy every moment of it. Back to business.

40m 26s

Gunjan, just a follow-up to the last question. When we think about the market here that you're trying to match the growth rate of, maybe if you could give us a little bit of an understanding as to what market we're talking about. When I speak with investors on this topic, I hear many different thoughts on what the market is. Is it pure play merchant acquirers? Is it other banks in the payments ecosystem of which, you know, everybody is, obviously? Or leaders in that regard. It would just be helpful to understand what your definition of market and market growth rate is. Thanks so much.

41m 5s

Thank you, Betsy, and thank you for your remarks for Terry and Andy. So first, we think of market as being U. S. Not global, because the growth rates are different. We have a credit box, very specific intentional range that we target So we think about that, which is not sort of super, super, super prime and it's certainly not prime. We're very well positioned sort of in the right mix of yield versus charge off rates in that middle to high segment. And then the third is we want profitable margins. So we do actually in our internal thinking, think of the big, big e commerce large box retailers as a different growth rate because we're very committed to high returns. And that market is big enough and growing healthy enough for it to be a very vibrant business for us.

41m 58s

Okay. Great. And then just a follow-up is on lending in general. And I noticed your C and I lending was quite strong this quarter. Anything in payments there? And I did notice that your C and I lending commentary in the press release had to do with a majority of that coming from none non bank or non depository financial institutions. So could you give us some color on that? And is payments a part of that and DFI? Thanks.

42m 27s

Yeah. So Betsy, I'll start with that.

42m 30s

So on the commercial side, commercial loans, did see nice growth there. There's really three drivers as I think about it. We had some growth in ABS lending which is what you were referring to that obviously was a driver. We had greater utilization rate and that was across the board and throughout the quarter. It wasn't just at the end of the quarter, it persisted and it was all markets and we were up 50 basis points. And I'd say we're getting closer to kind of our long very long term normal rates in terms of utilization which good to see. And then the third thing is we've been seeing nice growth in our middle market loans particularly in expansion markets where we have been we have been growing as we've on one of the pages that we have we signify where those expansion markets are. So those are the three things that we're that we saw during the quarter for the growth that you mentioned.

43m 32s

Thanks so much.

43m 35s

Our next question comes from Mike Mayo from Wells Fargo. Please go ahead. Your line is open.

43m 41s

Hi. As well said by Gerard and Betsy on the tragedy. Gunjan, you're now CEO of U. S. Bancorp, I guess, of yesterday, and you did highlight some changes in management to make it more simple. Interconnected, focused on the five verticals. You said your number one priority to restore investor confidence with and you can see by the stock price, it's not the valuation it once was. You said you want to have better expenses, organic growth. And payments staying the way to better returns and always superior risk management. So hopefully, I summarized that okay. But and I I said at an investor day, like, Andy, I I I love you. But, unfortunately, I didn't love the stock price performance. And and so restoring investor trust with getting that confidence back to the company, which should lead to the stock price. So, Kungent, I mean, sometimes you have all star teams or often you have all star teams that lose regular teams. And so you can have a lot of good players. It just doesn't work out. So I'd say it just from a stock price standpoint, it hasn't worked out over the longer term. So Gunjan, stylistically, I know you're doing a lot of continuation, but what are you doing differently?

44m 51s

Now versus Andy? I know you're next to each other and your partners and all that, but I wanna know how you're different that might evolve U. S. Bancorp to better performance that would lead to higher stock price and your number one goal, restoring investor confidence? Thank you.

45m 6s

Good morning, Mike. So let me just start by acknowledging that I'm not happy with the stock performance as well. And so we feel the urgency and we hear the message. The priorities that I have laid out do reflect my observations and what we need to do differently. So the expense discipline, which was very core to the US Bank story, needs to come back and you've seen us make very strong progress there. That allows us to not just deliver the positive operating leverage, and the efficiency ratio targets that we are aiming for but also invest in organic growth so it's a sustainable sustainable performance trajectory. The second thing is, as you know, U. S. Bank's history has been to to grow through a series of acquisitions and then in more recent times since the GFC to outperform through risk management. We do need to build out the organic growth muscles. So to focus on taking a very exceptional set of businesses because our portfolio is very attractive. Amplifying their performance especially in payments, are all the priorities that I think say need to be done differently. And finally, it just comes back to a culture that will show a very different level of urgency around execution.

46m 30s

So again, I'll close my remarks by just acknowledging your comments. [indiscernible] we have exceptional franchise we're very confident that the results will be better going forward.

46m 41s

I appreciate that. When you look at the five verticals it might be the first time you mentioned it. What are what are the five verticals and because that's most of revenues and what's the opportunity to move the human bank franchise up to the U. S. Bancorp? Levels? It seems like those would be some organic growth opportunities.

47m

Thanks.

47m 1s

That is indeed very it's an important organic growth opportunity. And here you are talking about our merchant businesses. And just a reminder, the merchant MPS business is about 5% of our overall bank, but a very important differentiator for us. It's a very competitive space and the reason to think about focusing on the five verticals is you can build stronger tech led value propositions for each of the verticals. They are very large verticals. So they are retail, services, travel, entertainment, and health care. And the more we have focused our acquisition efforts and our organic growth efforts on those verticals, the deeper and the better execution we have. And today about 90% of our revenue focuses on those verticals.

47m 57s

And Union Bank? Of the potential to move that up to your level?

48m 2s

So Union Bank is a very affluent franchise a very attractive franchise, more than a million plus clients. 200,000 small businesses. Where we are there is about two thirds of the penetration on the consumer side relative to where we are on the rest of the franchise. And less than half on the small business side. So getting those two US bank levels in the medium term is a very important growth opportunity for us. Now you didn't ask, but let me just talk about a second one too, which is our Elan franchise. We serve 1,200 financial institutions in a white label way across The U. S. That platform has really improved. Just last year, we have made some very nice enhancements to the user experience in the core platform. And that's another growth engine that we are very excited about. Thank you, Mike.

49m 8s

Our next question comes from Erika Najarian from UBS. Please go ahead. Your line is open. Yes. Hi, good morning. My first question is for John. Just wanted to unpack on Slide 18 your comments of a medium term net interest margin of 3% plus medium term representing 2026, 2027. So I I quickly, looked at your so, typically, when we've seen this kind of uplift from the February, it's because there's some sort of some hedges that are rolling off And I'm looking at your C and I and CRE yields and then compared it to peers that aren't super hedged. And there doesn't seem to be a mismatch there. Bond yields are a little bit lower than peers. I'm wondering and I couldn't really tell from swap disclosures at Investor Day what could be optimized. But beyond rates, what is the balance sheet optimization plan to get you from the two seventy to 3%?

50m 14s

Sure. Thanks, Erica. So a couple of things there. In terms of the hedges and just how we're progressing here. What we're signifying there is the loan growth and investment portfolio mix as well as the repricing. So a lot of this is mechanical in terms of the repricing. I mentioned before, we have 5,000,000,000 to $7,000,000,000 on average per quarter that roll off on loans fixed rate loans that will reprice 150 to 200 basis points better and then an investment portfolio of $3,000,000,000 on average for the quarter. And so that those at the same levels as well 150 to 200 basis points. So those things will help drive up net margin over time and as well as how we think about the mix of our loan book. So reposition to things that have higher yield, better returns, those sorts of things. The other component of it then is on the deposit and funding side. And that is going to have a little bit of market attached to it. So to the extent the Fed cuts, and funding costs go down that will accelerate our trajectory on net interest margin if we stay at a flatter rate or inverted like we are today on the short end of the curve then that it could take a little bit longer, and that's just contemplated within this with this guide here.

51m 38s

And so those are the things that we are considering. You also made a comment on hedges and I just to be clear, there is really no net interest income impact from our hedges. The PayFix swaps that we have on the investment portfolio from an accrual standpoint completely offset receive fixed swaps we have on the commercial loan book. And so you're you may look at period comparisons. I know it's hard to do because you don't see every single swap and all that sort of thing. But at the end of the day, when you put it all together, all these rates were all these hedges were put on in roughly the same zip code of rates that we are today. And so the accrual of all that is negligible to the net interest income.

52m 24s

Got it. And my second question is just maybe re asking Gerard's question another way. When we got together in September during Investor Day, you unveiled a $5,000,000,000 buyback. You talked about a modest pace of buyback activity. And sort of pegged it, I'm guessing to the 10% AOCI number improving to 8.8% this quarter. And if I recall correctly, I think there was some commentary in September about being back half weighted in 2025 in terms of the buyback activity. And I guess as I think about the opportunity and I'm guessing based on Gunjan's comments, you think that stock is inherently undervalued and obviously the macro isn't helping the value of the stock either.

53m 22s

What What is our marker? Is our marker now the 10% CET1 including AOCI? Is our marker [indiscernible] have changed because of the economic uncertainty in terms of the buyback pacing?

53m 40s

Yes. So it's a a number of things, Erika, that we looked at. I mean, obviously, in in September, we talked about our our new buyback program and how we will balance out distribution with with capital build. And we continue to see that and want to do that. We've been doing a good job in marching higher our capital levels as we mentioned the 8.8 but we aspire to be at 10% on a CAT II basis and so as we kind of move forward, our objective is to continue to grow the share repurchase over time. But in the meantime, we want to make it more balanced. We want to continue to grow capital and we are mindful of other things such as loan growth, as the macroeconomic environment, share price obviously matters. So all those things we have to consider But those are that's kind of the glide path that we talked about and that's still consistent with what we mentioned in back in September.

54m 37s

And Joan, I'll just add, Eric, we are very committed to the overall distribution levels and getting to that in due course. So this is really a matter of managing the transition especially in a time like that prudently and not being in a rush to do something small, but very committed to the long term distribution targets we have. Got it. Thank you.

55m 5s

Our next question comes from Ebrahim Poonawala from Bank of America. Please go ahead. Your line is open.

55m 11s

Good morning.

55m 12s

I guess, first, I just want to echo what Betsy and Jira said. So but in terms of the question, John, just wanna make sure I'm not putting words in your mouth, but did you bless that you believe that absent any macro shocks, the margin should be a a 3% average for 2027?

55m 37s

So we didn't necessarily necessarily say that Ebrahim. What we're talking about is our expectations that we will achieve 3% net interest margin over the medium term, 2026 or 2027. Those are Those are the two dates that we have in mind. It's not an average or anything. It's just a achieving that level. The speed and pace in which we can get there really depend on with respect to at least the last one, the curve shape, deposit environment, and then bonus would be loan growth as well, which we have a very modest amount in our forecast given the environment that we're in. The first two are fairly mechanical and are very much in our control. And so that's the third is more of the flip is the more of the item that we're watching more. And so that's kind of what we meant by that those comments.

56m 28s

Got it. And I guess just a separate question on expenses. So laser focus on operating leverage, it's been flat. Is it fair to assume that we could see multiple quarters of flat to lower expenses yeah, in in the kind of revenue growth backlog that you have talked about or guided for given all the efficiency of within the bank or is that being too aggressive?

56m 52s

Ebrahim, let me start there. What we are managing to is delivering positive operating leverage To the extent that the revenue picture has some uncertainty to it, we are our expense base deliver both positive operating leverage and invest back into growth. So what you should be looking for is the consistent positive operating leverage and the expense base will depend on the revenue environment.

57m 21s

Got Thank you.

57m 23s

Thank you.

57m 26s

Our next question comes from Bill Karpash from Wolfe Securities. Please go ahead. Your line is open.

57m 33s

Good morning, Gunjan and John, and thank you for taking my questions. Following up on your expense commentary, your 200 plus basis points of positive operating leverage is very clear in your guidance, but is it reasonable to expect that positive operating leverage could break above 300 basis points given the continued tailwinds fixed rate asset repricing that are fairly mechanical in nature, your NIM commentary, John, and and sort of just that expense trajectory that you've been on understanding there's a lot of uncertainty a macro level, but sort of steady state with where we are, would that be a reasonable expectation?

58m 16s

Sure. Thanks, Bill. So I think in terms of operating leverage, to reiterate what Gunjan said, we're We're looking at obviously growing our revenues through a number of different initiatives that we've talked about. And how that comes to be. Obviously, there's a macro environment that we have to acknowledge. And to the extent that that is better than what we would expected then we will grow expenses to to match that. Things are on the other side then we'll flex down and we have the levers to do that. Ultimately, we're talking about achieving over 200 basis points of positive operating leverage. And that may bounce up and down a little bit above that level quarter to quarter based on the circumstances of that quarter.

59m 3s

So could something hit 300 basis points? It could. It's possible. But we wouldn't likely want to invest and make some additional investments during that particular quarter. So that's going to be the throttle that we think about as we move forward.

59m 16s

Understood. Thanks, John. And separately on credit, you're flat relatively flat reserve rate seems consistent with stable asset quality across your consumer commercial portfolios. But maybe if you could just discuss what you're hearing from clients who are most exposed to changes in tariff policy. There's still lot we don't know, but can you give us a sense for whether your client base is more exposed to the risk of potentially more significant credit event versus simply just slower growth that would be relatively manageable?

59m 50s

Sure. Thanks, Bill. So broadly speaking, we're not seeing anything.

59m 56s

Overall. It's way too early, as you said. Commentary changes frequently. And so we're all awaiting and watching However, all that said, as you would expect, we have a very strong credit risk management team. They have a an idea of the subsets of portfolios that we look at. That would be all the natural players that you would think of when you think of tariff on things like automobiles and building materials and things of that variety. So when you think of that sort of thing, the important thing is also understanding the client because each client is going to have a different supply chain, different unique circumstances. So it's really about understanding the portfolio and getting ready for those sorts of events. We're hopeful for it but we're also acknowledging that there are conversations out there on tariffs and we want to be prepared for Thank you for taking my questions.

1h 52s

Thank you.

1h 55s

Our next question comes from Ken Usdin from Autonomous Research. Please go ahead. Your line is open.

1h 1m 3s

Thanks. Good morning. If I could just clean up a couple of quick things. Can you just let us know what curve you're now using in terms of cuts in the ten year relative to what you gave us in January?

1h 1m 14s

Sure. So right now, most recent forecast includes two cuts, one in the summer and one in the fall from the Federal Reserve on the short end and then the long term rates are pretty much in the zip code.

1h 1m 28s

Of what we have today throughout the the course of the year. So that's effectively what our expectation or our projections are at this point.

1h 1m 36s

Okay, cool. And then a couple of quick things on fees. So in the payment side, you had talked previously quarters about prepaid card getting to a run rate. Did that happen in the first quarter? And kind of going forward, any other things we should be thinking about outside of seasonality, in terms of just the kind of organic growth rate of payments?

1h 1m 58s

Yes. So prepaid card had some impact this quarter. That's all completed now. It's worth a couple of points within that line item of the card book. That's all completed now. And so going forward, I would expect normal seasonality that you would expect from and we've talked about that or had that in our slides in the previous in terms of trends that we see up from a seasonal basis. So all those things still hold and that's our expectation going forward.

1h 2m 25s

Okay. And last one, just on you mentioned I think in your remarks about how the corporate services capital markets had a good DCM or debt issuance type of quarter.

1h 2m 36s

Do you see some of that as either pull forward in the environment or just can you just talk through your general pipelines for the capital markets side of that corporate services business? Thanks.

1h 2m 46s

Sure. Yeah, the capital markets business continues to show a lot of growth opportunities. We've been growing our client base. Both in terms of high grade as well as investment grade as well as high yield. The foreign exchange and derivative or client interest rate derivative businesses have very strong pipelines. The market volatility has been very good to those businesses as we continue to build that out. So we have a lot of momentum in that space. And we feel really good about it as we move March throughout the course of the year.

1h 3m 29s

Thank you.

1h 3m 29s

Our next question comes from John Pancari from Evercore ISI. Please go ahead. Your line is open.

1h 3m 37s

Good morning. Just a follow-up there on fee side. I know you you cited mid single digit growth expectation on fees. And I just want to see if you more explicitly break that down by the various lines, if you're how you're thinking and if that's changed from previous. And more specifically, I'm interested in card. I know I think you have pointed out in the past that you're confident in the mid single digit growth rate in card. In 2025, but it was up about 1.5% year over year this quarter. I know you mentioned card spend was weaker earlier in the quarter and stabilized in March. But how is mid single digits attainable when you're coming off of this level and there's uncertainty in the macro outlook? Thanks.

1h 4m 24s

Sure. So in terms of mid single digit growth, that's for the entire fee complex that we have not just card. Card was impacted as I mentioned with the prepaid item for the first quarter. But as we get beyond that, then we expect to grow and the payment trends that Gunjan spoke of was really a temporary phenomenon terms of the weather. So that's really what we saw there. We expect to see growth in that as well as areas like trust capital markets that I just spoke of and things like that. Other revenue was also up and I would mention we've given a range of 125,000,000 to 150,000,000 I would expect that to be on the upper end of that range as we move forward throughout the course of the year. So it's those sorts of things that are driving us for that mid single growth for digit growth for the fee complex.

1h 5m 18s

And again, excluding that, the prepaid card and then the weather dynamic, I mean, you did you achieve, would you say, about a mid single digit growth year over year pace when adjusted basis in the card business?

1h 5m 34s

Card grew at 4%, credit card just overall, forgetting the prepaid for a moment. So we're at that at that pace. So we feel good about the trajectory.

1h 5m 45s

Okay.

1h 5m 46s

Got it. All right. Thanks for that, John. And then separately, back to the operating leverage, not to beat the dead horse, but the the 200 basis point expectation, and I know you had indicated several times that you do have some levers If revenue does come in weaker and we all worry for the industry as a whole, as we're looking at it right now, revenue may come in weaker. So like what are the areas that you actually have levers? What areas can you pull back materially in costs where you already haven't done so? I just want to see if you can kind of maybe walk through that because it's clear that you're investing and you're in the middle of still of a transformation in payments and obviously strengthening your organic capabilities. So curious where the real levers are in the cost base?

1h 6m 35s

Sure. So in terms of the cost base, a lot of the programs that we listed on our slide deck is really programs that we have on expenses. And some of these things are short term that can be realized immediately. Some are take a longer time to implement. And so the timing of that matters in terms of the levers that we can pull And so as we've talked about with operating leverage, we have flexibility within that expense those expense programs to increase or increase the pace of savings or not depending on the revenue environment. And so obviously we're watching the revenue environment like everybody else. And this is just the number of things that we can do whether it's real estate, or automation or looking at our org structures and things of that variety. We have control over.

1h 7m 24s

And so those are sorts of levers that we have.

1h 7m 27s

And John, I'll just add that the flex es and how much we reinvest back into the business, the expense savings we are focused on driving. So the flex is just how much we invest back in the business.

1h 7m 41s

Okay, great. Thank you, Gotu. Thanks, John. Thank you. You bet.

1h 7m 46s

Our next question comes from Saul Martinez from HSBC. Please go ahead. Your line is open.

1h 7m 52s

Hi.

1h 7m 53s

Thank you for taking my questions. I wanted to go back to slide 18 and and drill down on that and and if you if they run the math, on that slide and and you know, think about what it implies for net interest income. You have $700,000,000,000 plus of average earning assets in twenty seven. If I assume the ratio of earning assets to total assets is roughly constant, from here and apply 3% NIM, it you get to over a $19,000,000,000 net interest income figure for 02/1927, which is, you know, a CAGR of over five from '24 and you know, versus '25 where the growth is probably gonna be less than that It kind of implies almost high single digit growth and on the back end of that, '26 and '27, and it's well above, you know, our estimate or or consensus. So I'm curious what your reaction to that is. And are you do you think consensus is too low? For net interest income? And you know, in addition to that, what are you you know, I assume you're you're assuming, I think you're assuming low single digit loan growth and and, you know, the long end of the curve, of staying where it's at.

1h 9m 5s

But you know, just anything any additional, details on some of the underlying assumptions would be helpful as well.

1h 9m 13s

Sure, Saul. Thank you for that. So if I what we wanted to project is just our thoughts on what our thoughts are around particularly on the asset side, how the balance sheet is going to grow as you suggest if do the math on just kind of the midpoints of those ranges really kind of a low single digit growth, which implies the loan growth is is muted and that's what we see and that's how we that's what we forecast. Now it certainly could be bigger than that. Depending on how the economy evolves etcetera. We don't know that Getting up to 2027 and making a call on net interest income is very hard to do obviously and I won't do that here. I'm just offering a page to share with you our thoughts on how the net interest margin will evolve over time. And it really is driven by the two things that are quite mechanical in our control, which is loan and investment portfolio repricing and remixing that we think will be very beneficial to us. And then the funding component will have some market components as I mentioned. So those are kind of the highlights of that page.

1h 10m 20s

We just want to provide a path of how we're thinking about net interest margin go forward. I get that. And I get that it's you know, unclear or you don't wanna give a net interest to specific net interest income figure for '27. But you know, we have the NIM. You're giving a NIM figure, and you're giving an asset figure. So you know, we can multiply one by the other and, you know Sure. Extrapolate. So you know, and it it does seem to be suggesting a much higher figure than you know, where the street is at in terms of net interest income.

1h 10m 56s

Yeah. I mean, it's it's, again, it's based on our our internal view of how we believe that the net interest income will evolve given the assets that we have in the balance sheet, how those will reprice over time. And how our deposit optimization can work over time. Again, we assume a upward sloping curve here. And some of the projections we talked about Investor Day those apply to this. And so that's those are some of the factors that we have to consider And it creates a wide range of change, but we wanted to provide you at least the path of how we think about it within our modeling.

1h 11m 34s

Okay. That's helpful. I'll see the floor. Thank you.

1h 11m 40s

Our next question comes from Vivek Jinja from JPMorgan. Please go ahead. Your line is open.

1h 11m 47s

Thanks.

1h 11m 49s

Couple of questions.

1h 11m 52s

Firstly, merchant processing and corporate trust.

1h 11m 56s

What percentage of the revenues are in Europe?

1h 12m 3s

Well, on merchant side, it's about a third of the revenues as it relates to to that. On the trust and fund services, it's even smaller than that. It's probably sub 10%, I would say.

1h 12m 18s

Okay.

1h 12m 21s

Different topic. Gunjan, your thoughts on this. You've talked about the Edward Jones partnership. And driving growth through that.

1h 12m 32s

There was an article that I saw about Edward Jones actually submitting an application to set up their own bank. And wanting to grow their own deposit program. You talk a little bit about how that would work with your partnership?

1h 12m 49s

Good morning, Vivek. So we are very aware of their plans, and we have been on through our discussions around the partnership. What they are trying to do with their own bank application is a very limited scope for CD like saving products, but the big bulk of banking capability that combines with their the financial advice and brokerage capabilities is gonna come from us. So this was very well contemplated to our discussions. Not a surprise to us.

1h 13m 22s

Okay. Okay. And lastly, Justin, that cleanup thing for you, John, other income, is you'd guided previously to $1.25 to $1.50. Million. Is that still the normal run rate?

1h 13m 37s

Given the upside you had this quarter?

1h 13m 40s

Yes. I think that we'll be on the high end of that range as we about that going forward. Some more in the 150 area is kind of how we think about that for the foreseeable future. [indiscernible] Thank you.

1h 13m 55s

Our last question will come from Matt O'Connor from Deutsche Bank. Please go ahead. Your line is open.

1h 14m 1s

Good morning, Matt. Hi. Hello, Matt.

1h 14m 3s

Morning, Mitch.

1h 14m 3s

Hi.

1h 14m 4s

I want to follow-up on the new credit card the 0% for two years. And often there's an upfront drag, as you kinda ramp up those loans and then obviously get payback on the other side But anything that we should be modeling for that as we think about kind of upfront next several quarters?

1h 14m 28s

Matt, the the concept is very appropriate. There is an investment into building out the pipeline. We manage that quite carefully so that it does not change the overall dynamics of the fee growth and it's a consistent inching up of the organic growth to create momentum going forward. So we would not expect it to show up in your modeling in any meaningful way. But it does create pipeline strength eighteen to twenty four months out.

1h 14m 56s

Okay. And then a little bit of a lead into my follow-up question.

1h 14m 59s

On the net interest income guide for 2Q. Think ex day count, if you take the midpoint, it's relatively flat.

1h 15m 7s

And I guess I don't know why why not grow a little bit as we think about progressing throughout the year starting in 2Q?

1h 15m 15s

Yes, sure, Matt. So I think just given the environment, and how things have evolved, wanted to provide a little bit more of a range We do expect net interest income to grow. Obviously, is one more day it's about $20,000,000 or so for the second quarter. Ex that, we do expect growth, but we it's volatile market and we want to had some uncertainties and we will or there is uncertainty, I should say, in the marketplace and we want to reflect that.

1h 15m 41s

Got it. Thank you.

1h 15m 46s

There are no further questions at this time. Mr. Anderson, I turn the call back over to you.

1h 15m 52s

Thank you to everyone who joined our call this morning. Please contact the Investor Relations department if you have any follow-up questions. You may now disconnect the call. Thank you.

1h 16m 2s

This concludes today's conference call. You may now disconnect.

Key Insights

USB reported Q1 earnings per share of $1.03, a return on tangible common equity of 17.5%, and achieved its third consecutive quarter of revenues outpacing expenses on an adjusted basis, with positive operating leverage of 270 basis points year-over-year.
Credit quality and capital levels remain strong, with a modest improvement in the net charge-off ratio, a CET1 capital ratio of 10.8% (up 20 bps), and tangible book value per share up 13.8% year-over-year to $25.64.
The bank reaffirmed its medium-term targets despite macroeconomic uncertainty, including a net interest margin (NIM) target of 3%+ by 2026-2027, and expects to deliver positive operating leverage of at least 200 basis points for full year 2025, with adjusted net revenue growth guidance of 3%-5%.
USB continues to focus on expense discipline, organic growth, and transformation of its payments business, with mid-single digit fee growth expected for 2025; payments and trust/investment management are key drivers, and the bank is investing in tech-led merchant acquiring focused on five industry verticals.
Management expects modest share repurchases to continue as capital builds toward a 10% CET1 target (including AOCI), and is prepared to flex expenses as needed to maintain positive operating leverage amid revenue uncertainty; consumer spending remains stable, and commercial loan growth is supported by ABS lending, higher utilization rates, and middle market expansion.

Recent Transcripts

US Bancorp delivered strong operating leverage and reaffirmed medium-term growth targets.

Delivered strong Q4 results with 190bps positive operating leverage, guiding 3-5% revenue growth for 2025.

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$23B	$23B	$24B	$28B	$27B
Cost of Revenue	$0	-$1.2B	$0	$0	$0
Gross Profit	$23B	$24B	$24B	$28B	$27B
Gross Profit %	100%	105%	100%	100%	100%
R&D Expenses	$0	$0	$0	$0	$0

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	$5B	$8B	$5.8B	$5.4B	$6.3B
Dep. & Amort.	$527M	$497M	$560M	$1B	$939M
Def. Tax	$0	$0	$0	$0	$0
Stock Comp.	$0	$0	$202M	$224M	$0
Chg. in WC	$0	$0	$0	$0	$0

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$63B	$29B	$53B	$61B	$56B
ST Investments	$136B	$132B	$72B	$69B	$86B
Cash & ST Inv.	$199B	$161B	$126B	$131B	$143B
Receivables	$14B	$12B	$10B	$8.3B	$8.3B
Inventory	$0	$0	$0	$0	$0

2020

2021

2022

2023

2024

Cash

$63B

$29B

$53B

$61B

$56B

ST Investments

$136B

$132B

$72B

$69B

$86B

Cash & ST Inv.

$199B

$161B

$126B

$131B

$143B

Receivables

$14B

$12B

$10B

$8.3B

Inventory

Go Deeper

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. Reported revenue and EPS data from Earnings powered by FinChat.io. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice. · See all tickers.

Overview
Latest News
Earnings
Income Statement
Cash Flow
Balance Sheet
Related

Earnings

Report Date

Apr 16, 2025

Reported Revenue

Beat +0.72%

Avg 1d Change

4.25%

Report Period

Q1 2025

Reported EPS

Beat +5.21%

Implied Move 1d

3.48%

Transcript

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Our first question comes from Gerard Cassidy from RBC Capital Markets.

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Great. And Andy, good luck in retirement. I wish you a lot of future success.

33m 17s

Thank you.

33m 19s

Thanks, Gerard. Next question comes from Scott Siefers from Piper Sandler. Please go ahead. Your line is open.

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So we understand the market has changed, but our our clients are resilient and we have a lot of confidence in our ability to execute.

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Perfect. All right. Thank you both for all the color.

36m 36s

Thank you, Scott.

36m 39s

Our next question comes from John McDonald from Truist Securities. Please go ahead. Your line is open.

36m 46s

Gunjan, wanted to ask you a little bit bigger picture on the payments business.

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37m 11s

Good morning, John. It is a very good question.

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So So that's sort of our expectation for payments.

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Okay. Thank you.

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42m 27s

Yeah. So Betsy, I'll start with that.

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43m 32s

Thanks so much.

43m 35s

Our next question comes from Mike Mayo from Wells Fargo. Please go ahead. Your line is open.

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46m 30s

So again, I'll close my remarks by just acknowledging your comments. [indiscernible] we have exceptional franchise we're very confident that the results will be better going forward.

46m 41s

47m

Thanks.

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And Union Bank? Of the potential to move that up to your level?

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What What is our marker? Is our marker now the 10% CET1 including AOCI? Is our marker [indiscernible] have changed because of the economic uncertainty in terms of the buyback pacing?

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55m 5s

Our next question comes from Ebrahim Poonawala from Bank of America. Please go ahead. Your line is open.

55m 11s

Good morning.

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57m 21s

Got Thank you.

57m 23s

Thank you.

57m 26s

Our next question comes from Bill Karpash from Wolfe Securities. Please go ahead. Your line is open.

57m 33s

58m 16s

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59m 50s

Sure. Thanks, Bill. So broadly speaking, we're not seeing anything.

59m 56s

1h 52s

Thank you.

1h 55s

Our next question comes from Ken Usdin from Autonomous Research. Please go ahead. Your line is open.

1h 1m 3s

Thanks. Good morning. If I could just clean up a couple of quick things. Can you just let us know what curve you're now using in terms of cuts in the ten year relative to what you gave us in January?

1h 1m 14s

1h 1m 28s

Of what we have today throughout the the course of the year. So that's effectively what our expectation or our projections are at this point.

1h 1m 36s

1h 1m 58s

1h 2m 25s

Okay. And last one, just on you mentioned I think in your remarks about how the corporate services capital markets had a good DCM or debt issuance type of quarter.

1h 2m 36s

Do you see some of that as either pull forward in the environment or just can you just talk through your general pipelines for the capital markets side of that corporate services business? Thanks.

1h 2m 46s

1h 3m 29s

Thank you.

1h 3m 29s

Our next question comes from John Pancari from Evercore ISI. Please go ahead. Your line is open.

1h 3m 37s

1h 4m 24s

1h 5m 18s

1h 5m 34s

Card grew at 4%, credit card just overall, forgetting the prepaid for a moment. So we're at that at that pace. So we feel good about the trajectory.

1h 5m 45s

Okay.

1h 5m 46s

1h 6m 35s

1h 7m 24s

And so those are sorts of levers that we have.

1h 7m 27s

And John, I'll just add that the flex es and how much we reinvest back into the business, the expense savings we are focused on driving. So the flex is just how much we invest back in the business.

1h 7m 41s

Okay, great. Thank you, Gotu. Thanks, John. Thank you. You bet.

1h 7m 46s

Our next question comes from Saul Martinez from HSBC. Please go ahead. Your line is open.

1h 7m 52s

Hi.

1h 7m 53s

1h 9m 5s

But you know, just anything any additional, details on some of the underlying assumptions would be helpful as well.

1h 9m 13s

1h 10m 20s

1h 10m 56s

1h 11m 34s

Okay. That's helpful. I'll see the floor. Thank you.

1h 11m 40s

Our next question comes from Vivek Jinja from JPMorgan. Please go ahead. Your line is open.

1h 11m 47s

Thanks.

1h 11m 49s

Couple of questions.

1h 11m 52s

Firstly, merchant processing and corporate trust.

1h 11m 56s

What percentage of the revenues are in Europe?

1h 12m 3s

Well, on merchant side, it's about a third of the revenues as it relates to to that. On the trust and fund services, it's even smaller than that. It's probably sub 10%, I would say.

1h 12m 18s

Okay.

1h 12m 21s

Different topic. Gunjan, your thoughts on this. You've talked about the Edward Jones partnership. And driving growth through that.

1h 12m 32s

1h 12m 49s

1h 13m 22s

Okay. Okay. And lastly, Justin, that cleanup thing for you, John, other income, is you'd guided previously to $1.25 to $1.50. Million. Is that still the normal run rate?

1h 13m 37s

Given the upside you had this quarter?

1h 13m 40s

1h 13m 55s

Our last question will come from Matt O'Connor from Deutsche Bank. Please go ahead. Your line is open.

1h 14m 1s

Good morning, Matt. Hi. Hello, Matt.

1h 14m 3s

Morning, Mitch.

1h 14m 3s

Hi.

1h 14m 4s

1h 14m 28s

1h 14m 56s

Okay. And then a little bit of a lead into my follow-up question.

1h 14m 59s

On the net interest income guide for 2Q. Think ex day count, if you take the midpoint, it's relatively flat.

1h 15m 7s

And I guess I don't know why why not grow a little bit as we think about progressing throughout the year starting in 2Q?

1h 15m 15s

1h 15m 41s

Got it. Thank you.

1h 15m 46s

There are no further questions at this time. Mr. Anderson, I turn the call back over to you.

1h 15m 52s

Thank you to everyone who joined our call this morning. Please contact the Investor Relations department if you have any follow-up questions. You may now disconnect the call. Thank you.

1h 16m 2s

This concludes today's conference call. You may now disconnect.

Key Insights

USB reported Q1 earnings per share of $1.03, a return on tangible common equity of 17.5%, and achieved its third consecutive quarter of revenues outpacing expenses on an adjusted basis, with positive operating leverage of 270 basis points year-over-year.
Credit quality and capital levels remain strong, with a modest improvement in the net charge-off ratio, a CET1 capital ratio of 10.8% (up 20 bps), and tangible book value per share up 13.8% year-over-year to $25.64.
The bank reaffirmed its medium-term targets despite macroeconomic uncertainty, including a net interest margin (NIM) target of 3%+ by 2026-2027, and expects to deliver positive operating leverage of at least 200 basis points for full year 2025, with adjusted net revenue growth guidance of 3%-5%.
USB continues to focus on expense discipline, organic growth, and transformation of its payments business, with mid-single digit fee growth expected for 2025; payments and trust/investment management are key drivers, and the bank is investing in tech-led merchant acquiring focused on five industry verticals.
Management expects modest share repurchases to continue as capital builds toward a 10% CET1 target (including AOCI), and is prepared to flex expenses as needed to maintain positive operating leverage amid revenue uncertainty; consumer spending remains stable, and commercial loan growth is supported by ABS lending, higher utilization rates, and middle market expansion.

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