10-QPeriod: Q3 FY2024

US BANCORP \DE\ Quarterly Report for Q3 Ended Sep 30, 2024

Filed November 5, 2024For Securities:USBUSB-PHUSB-PPUSB-PRUSB-PQUSB-PSUSB-PA

Summary

U.S. Bancorp (USB) reported its financial results for the third quarter and the first nine months of 2024. For the third quarter, net income attributable to U.S. Bancorp was $1.714 billion, or $1.03 per diluted share, a notable increase from the prior year's $1.523 billion ($0.91 per diluted share), which was impacted by merger and integration charges. Total net revenue for the quarter decreased by 2.4% year-over-year, primarily due to a decline in net interest income driven by higher deposit costs, partially offset by higher earnings asset yields. Noninterest income also saw a slight decrease, impacted by net losses on investment securities sales. However, noninterest expense was significantly lower, down 7.2%, largely due to the absence of substantial merger and integration charges recorded in the prior year. The company's provision for credit losses increased by 8.2% due to higher net charge-offs, particularly in credit card, commercial, and commercial real estate loans. For the nine-month period, net income remained relatively flat year-over-year, with a slight increase in noninterest income being offset by a decrease in net interest income and lower provision for credit losses.

Financial Highlights

35 data points
Beta

Revenue

$6.86B

Net Income

$1.71B

25.0% Net Margin

EPS (Diluted)

$1.03

Total Assets

$686.47B

Cash & Equivalents

$73.56B

Free Cash Flow

$972.00M

Financial Statements
Beta
Revenue$6.86B
Net Income$1.71B
EPS (Basic)$1.03
EPS (Diluted)$1.03
Shares Outstanding (Basic)1.56B
Shares Outstanding (Diluted)1.56B

Key Highlights

  • 1Net income attributable to U.S. Bancorp increased by 12.5% in Q3 2024 compared to Q3 2023, reaching $1.714 billion.
  • 2Diluted earnings per share rose to $1.03 in Q3 2024 from $0.91 in Q3 2023.
  • 3Total net revenue declined by 2.4% in Q3 2024 year-over-year, primarily driven by a 2.4% decrease in net interest income.
  • 4Noninterest expense decreased by 7.2% in Q3 2024, benefiting from lower merger and integration charges compared to the prior year.
  • 5The provision for credit losses increased by 8.2% in Q3 2024, reflecting higher net charge-offs, notably in credit card, commercial, and commercial real estate portfolios.
  • 6Total deposits saw a modest increase of 1.7% at the end of Q3 2024 compared to year-end 2023, reaching $521.1 billion.
  • 7Common Equity Tier 1 (CET1) capital ratio improved to 10.5% at September 30, 2024, up from 9.9% at September 30, 2023.

Frequently Asked Questions

The decrease in net interest income, particularly for the third quarter of 2024 compared to the same period in 2023, was primarily driven by the impact of higher interest rates on deposit mix and pricing. This was partially offset by higher rates earned on earning assets and changes in balance sheet composition.

Noninterest expense decreased by 7.2% in the third quarter of 2024 compared to the third quarter of 2023. This decrease was primarily due to the absence of significant merger and integration charges recorded in the prior year, as well as lower other noninterest expense. However, this was partially offset by higher compensation and employee benefits expense.

U.S. Bancorp's capital ratios exceeded regulatory 'well-capitalized' requirements at September 30, 2024. Notably, the Common Equity Tier 1 (CET1) capital ratio improved to 10.5%, and the Tier 1 capital ratio was 12.2%, both exceeding regulatory thresholds. The company is also subject to upcoming regulatory capital framework refinements, which could revise risk-based capital measures.

The company manages credit risk through centralized credit policies, uniform underwriting criteria, and ongoing monitoring. Trends indicate an increase in net charge-offs, particularly in credit card, commercial, and commercial real estate loans, leading to a higher provision for credit losses. Nonperforming assets increased primarily due to higher nonperforming commercial and commercial real estate loans, with a notable increase in the commercial real estate office sector.