01—Abstract
Summary
Summary of the 8-K filed January 16, 2025. Cited figures are marked; the original filing is the authoritative source.
U.S. Bancorp (USB) reported fourth-quarter 2024 results on January 16, 2025.
Reported diluted EPS was $1.01a and net income attributable to U.S. Bancorp was $1,663 million. Excluding $109 million pre-tax ($82 million after tax, or $0.06 per share) of notable items tied to lease impairments and operational efficiency actions, adjusted diluted EPS was $1.07, up 8.1% from $0.99 in 4Q23, and adjusted return on tangible common equity was 18.3%. Adjusted positive operating leverage was 190 basis points year over year, with adjusted total net revenue up 1.9% and adjusted noninterest expense flat.
Full-year 2024 reported diluted EPS was $3.79b ($3.98 adjusted), and reported net income was $6,299 million. The quarter showed mixed underlying trends. Net interest income on a taxable-equivalent basis was $4,176 million, up 0.8% year over year, but net interest margin compressed to 2.71% from 2.78% as deposit funding costs rose and balance sheet mix shifted.
Fee income was a relative bright spot: adjusted noninterest income grew 3.5%c year over year, led by trust and investment management fees (up 13.2%) and commercial products revenue (up 11.7%). Average loans grew 0.8% year over year, while average noninterest-bearing deposits fell 8.5%. Credit quality was broadly stable, with a net charge-off ratio of 0.60%, though the provision for credit losses rose 9.4% year over year on higher credit card and commercial losses.
The allowance covered 2.09% of period-end loans. Capital remained strong, with the CET1 ratio (Basel III standardized) at 10.6%, up from 9.9% a year earlier, after the company began its first share repurchases ($100 milliond in the quarter) under a $5.0 billion authorization approved in September 2024. Management guided to 3% to 5% growth in full-year 2025 adjusted total net revenue versus 2024 and to positive operating leverage, with 1Q25 net interest income described as relatively stable with 4Q24 excluding the impact of two fewer days in the quarter.
02—Key points
Key Highlights
- Reported 4Q24 diluted EPS of $1.01 included $109 million of pre-tax notable items; adjusted EPS was $1.07, up 8.1% year over year.
- Adjusted return on tangible common equity was 18.3% and adjusted efficiency ratio was 59.9%, with adjusted positive operating leverage of 190 basis points year over year.
- Net interest margin fell to 2.71% from 2.78% a year earlier as deposit costs rose and average noninterest-bearing deposits declined 8.5%.
- Adjusted noninterest income rose 3.5% year over year, driven by trust and investment management fees (+13.2%) and commercial products revenue (+11.7%).
- Provision for credit losses increased 9.4% year over year to $560 million, mainly from higher credit card and commercial losses; the net charge-off ratio was stable at 0.60%.
- CET1 ratio rose to 10.6% from 9.9% a year earlier, and the company made its first $100 million of share repurchases under a $5.0 billion authorization.
- Management guided to 3% to 5% growth in full-year 2025 adjusted total net revenue and to positive operating leverage.
03—Questions
Frequently Asked Questions
Did U.S. Bancorp beat or miss expectations in 4Q24?
This filing does not include analyst consensus estimates, so a beat or miss cannot be determined from it. On an adjusted basis, EPS of $1.07 grew 8.1% year over year and the company delivered 190 basis points of positive operating leverage. Reported EPS of $1.01 reflects $0.06 per share of lease impairment and operational efficiency charges.
Why did net interest margin decline, and is it a concern?
NIM fell to 2.71% from 2.78% a year earlier. Management attributed the decline to balance sheet composition, including higher deposit funding costs and a shift in deposit mix. Net interest income still rose 0.8% year over year on a taxable-equivalent basis, because of higher earning-asset yields and balance sheet growth. Investors should watch whether deposit pricing pressure persists into 2025.
How is credit quality trending?
Credit quality was broadly stable. The net charge-off ratio was 0.60%, unchanged from the prior quarter but up from 0.49% a year earlier. Credit card charge-offs were 4.28% of average balances. The allowance for credit losses was 2.09% of period-end loans and covered 442% of nonperforming loans. Nonperforming assets rose to $1.83 billion from $1.49 billion a year earlier, mainly from commercial and commercial real estate loans.
What does the 2025 outlook look like?
Management guided to full-year 2025 adjusted total net revenue growth of 3% to 5% over 2024's $27.6 billion, with positive operating leverage. For 1Q25, net interest income is expected to be relatively stable with 4Q24's $4,176 million, excluding the impact of two fewer days in the quarter. Adjusted noninterest expense is expected to be relatively stable with 4Q24's $4,202 million.
What drove the capital and share repurchase activity?
The CET1 ratio rose to 10.6% from 9.9% a year earlier as earnings were retained, net of distributions. The company repurchased $100 million of shares in 4Q24 under a $5.0 billion authorization approved in September 2024. Total common dividends were $0.50 per share for the quarter, and earnings returned to shareholders totaled $906 million in the quarter.
04—Continue