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US BANCORP \DE\ 8-K Report, Financial Results (Jul 17, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed July 17, 2024
Period End
July 17, 2024
In the record · 2016–202610-K1110-Q328-K199

USB filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 199 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Feb ’18Feb ’18
  2. Leadership change8-K · Jan ’22Jan ’22
  3. Leadership change8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 8-K filed July 17, 2024. Cited figures are marked; the original filing is the authoritative source.

U.S. Bancorp reported second-quarter 2024 results on July 17, 2024.

Reported net income attributable to the company was $1,603 milliona, or $0.97 diluted EPS. Excluding a $26 million pre-tax ($19 million after-tax) notable item for an increase in the FDIC special assessment, adjusted net income was $1,622 million and adjusted diluted EPS was $0.98, up 8.9% from the first quarter's adjusted $0.90 but down 12.5% from $1.12 in the second quarter of 2023. Adjusted net revenue rose 2.3% linked quarter to $6,867 million, while adjusted noninterest expense fell 1.7% year-over-year and was roughly flat linked quarter.

Return on tangible common equity was 18.6% and the efficiency ratio was 60.7%, both adjusted. The year-over-year picture is weaker. Net interest income fell 8.9% to $4,052 millionb (taxable-equivalent) as deposit mix shifted toward higher-cost products and average noninterest-bearing deposits dropped 26.7%.

The net interest margin compressed to 2.67% from 2.90%. Average loans declined 3.6% year-over-year, though they grew 1.0% linked quarter, and average total deposits rose 3.3% year-over-year and 2.2% linked quarter. Credit quality showed continued pressure: the net charge-off ratio rose to 0.58% from 0.53% in the prior quarter, nonperforming assets reached $1,852 millionc, driven largely by commercial real estate office loans, and the allowance for credit losses was 2.11% of period-end loans.

Capital strengthened, with the CET1 ratio (Basel III standardized) at 10.3%d, up 30 basis points linked quarter and 120 basis points year-over-year. The company has suspended common share repurchases other than those tied to stock compensation plans, and management previously indicated a planned 2% dividend increase in the fourth quarter, subject to board approval.

Management guided to full-year 2024 adjusted net interest income of $16.1 billion to $16.4 billion, noninterest expense of $16.8 billion or less, and noninterest income of $10.8 billion or so was not restated; the 8-K materials emphasize stable third-quarter net interest income near $4,052 million. Gunjan Kedia was named President, reporting to CEO Andy Cecere.

02—Key points

Key Highlights

  1. Adjusted diluted EPS of $0.98 (reported $0.97), up 8.9% linked quarter but down 12.5% year-over-year
  2. Net interest income down 8.9% year-over-year to $4,052 million (taxable-equivalent) as deposit mix and pricing pressured margin; NIM fell to 2.67% from 2.90%
  3. Adjusted noninterest expense down 1.7% year-over-year; efficiency ratio improved to 60.7% (adjusted), supported by MUB acquisition synergies
  4. CET1 ratio rose to 10.3%, up 30 bps linked quarter and 120 bps year-over-year
  5. Net charge-off ratio rose to 0.58% from 0.53% linked quarter; nonperforming assets up to $1,852 million, led by CRE office loans
  6. Average total deposits up 2.2% linked quarter, with savings and time deposit growth offsetting a 26.7% year-over-year decline in noninterest-bearing deposits
  7. Common share repurchases suspended except for stock compensation programs; Gunjan Kedia named President

03—Questions

Frequently Asked Questions

  1. Why did earnings per share decline year-over-year despite lower expenses?

    Adjusted EPS fell from $1.12 to $0.98 mainly because net interest income dropped $397 million (8.9%) as higher funding costs and deposit mix shifts compressed the net interest margin from 2.90% to 2.67%. Lower adjusted noninterest expense (down 1.7%) and a lower provision partially offset this, but not fully.

  2. Is credit quality deteriorating?

    Partly. Net charge-offs were $538 million (0.58%), up from $488 million (0.53%) in the first quarter and from 0.35% excluding notable items a year earlier. Nonperforming assets rose to $1,852 million, mostly from commercial real estate office loans. Management described trends as stabilizing, and the allowance covered 2.11% of period-end loans.

  3. How strong is the company's capital position?

    Strong by regulatory measures. The CET1 ratio under Basel III standardized rose to 10.3%, the Tier 1 ratio was 11.9%, and the total risk-based capital ratio was 14.0%. All ratios exceed well-capitalized thresholds. Share repurchases remain suspended except for stock compensation programs, pending clarity on proposed capital rules.

  4. What is the outlook for the rest of 2024?

    Per the earnings call materials, management expects third-quarter net interest income to be relatively stable versus the second quarter's $4,052 million, and full-year 2024 net interest income of about $16.1 to $16.4 billion on a taxable-equivalent basis. Full-year adjusted noninterest expense is guided to $16.8 billion or less.

04—Continue

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