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U.S. Bancorp (USB) Up 0.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for U.S. Bancorp (USB). Shares have added about 0.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is U.S. Bancorp due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

U.S. Bancorp Q4 Earnings Miss Estimates, Costs Increase

U.S. Bancorp reported fourth-quarter 2021 earnings per share of $1.07, which missed the Zacks Consensus Estimate of $1.11. Results, however, compare favorably with the prior-year quarter’s figure of 95 cents.

Though lower revenues and escalating expenses were disappointing factors, credit quality acted as a tailwind. Growth in loan and deposit balance and a strong capital position were encouraging factors.

Net income came in at $1.67 billion compared with the prior-year quarter’s $1.53 billion.

For full-year 2021 net income came in at $7.98 billion, compared with prior year’s $4.99 billion. 2021 earnings per share came in at $5.10 per share, marginally missing the Zacks Consensus Estimate of $5.13. Nonetheless, the earnings figure compares favorably with the prior-year tally of $3.06 per share.

Revenues Decline, Costs Flare Up

In the fourth quarter, U.S. Bancorp’s total net revenues were $5.6 billion, down 1.2% year over year. Also, the top line marginally missed the Zacks Consensus Estimate of $5.76 billion.

Full year 2021 net revenues stood at $22.72 billion, down 2.1% from $23.23 billion recorded in 2020.

U.S. Bancorp’s tax-equivalent NII totaled $3.12 billion in the reported quarter, down 1.5% from the prior-year quarter. The decline mainly stemmed due to lower loan spreads and mix of earning assets, partially mitigated by deposit and funding mix, and by higher investment portfolio balance.

Average earning assets climbed 5% year over year, supported by growth in average investment securities and average total loans, offset by lower cash balances. However, the NIM of 2.4% shrunk 17 basis points, mainly due to mix of loans, lower loan spreads and higher investment portfolio balances, partially offset by the net benefit of funding composition.

U.S. Bancorp’s non-interest income decreased marginally on a year-over-year basis to $2.53 billion. The fall was mainly owing to lower mortgage banking revenue, other noninterest income and securities gains offset by strong growth in payments revenues, trust and investment management fees, deposit service charges, and commercial products revenues.

U.S. Bancorp’s non-interest expenses climbed 5% year over year to $3.53 billion. The rise mainly resulted from elevated compensation expense, employee benefits expense, professional services expense, and marketing and business development. However, this was partly muted by reduced other non-interest expenses to some extent.

Efficiency ratio was at 62.3%, higher than the year-ago quarter’s 58.8%. An increase in the ratio indicates a fall in profitability.

U.S. Bancorp’s average total loans improved 2% sequentially to $302.8 billion. This stemmed from higher credit card loans and other retail loans. Average total deposits were up 6.5% from the prior quarter to $449.8 billion. The uptick was driven by Wealth Management and Investment Services, and Corporate and Commercial Banking.

Credit Quality Strong

Provision for credit losses in the reported quarter was a benefit of $13 million against provisions of $441 million in the prior-year quarter. Net charge-offs were $132 million, down 71% year over year. Total allowance for credit losses was $6.2 billion, down 23.2%.

However, U.S. Bancorp’s non-performing assets were $701 million, up 13.6% year over year.

Healthy Capital Position

In the fourth quarter, U.S. Bancorp maintained a solid capital position. The Tier 1 capital ratio came in at 11.6% compared with the prior-year quarter’s 11.3%. Common Equity Tier 1 capital to risk-weighted assets ratio was 10% as of Dec 31, 2021, up from 9.7% reported in the year-ago quarter.

All regulatory ratios of U.S. Bancorp continued to be more than well-capitalized requirements. In addition, reflecting the full implementation of the current expected credit losses methodology, the Tier 1 capital to risk-weighted assets ratio was 9.6 % as of Dec 31, 2021.

U.S. Bancorp posted an improvement in book value per share, which increased to $32.71 as of Dec 31, 2021, from $31.26 recorded at the end of the year-earlier quarter.

However, the tangible common equity to tangible assets ratio was 6.8 % as of Dec 31, 2021, down from the prior-year quarter’s 6.9%.


Management expects first-quarter 2022 fully-taxable equivalent NII and NIM to be relatively stable, sequentially. Assuming three rate hikes, the company expects 2022 NII on a taxable equivalent basis to increase in mid-single digits.

Management expects mortgage revenues to be slightly lower in the first quarter, sequentially, due to slower refinancing activity. Credit card revenues are projected to be stable on a year-over-year basis as high-single digit growth in credit and debit card fees will likely be offset by lower prepaid processing fees. Payments revenues are estimated to be reasonably lower in the first quarter. Nonetheless, excluding the prepaid headwind which will recede after the first quarter, total payment revenues are anticipated to increase at a low teen rate on a year-over-year basis in the first quarter.Management expects other revenues to approximate $125-$150 million per quarter over 2022. First-quarter 2022 total revenues will likely increase from the year-ago reported figure at a high-single digit pace, steered by double-digit growth in both merchant processing revenues and corporate payments revenues.

In the first quarter of 2022, the company anticipates witnessing relatively stable expenses compared with the fourth-quarter 2021 level.

The net charge-off ratio is anticipated to remain lower than the historical levels over the next few quarters but will normalize over time.

For 2022, the company expects the taxable equivalent tax rate to be approximately 21%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted 28.04% due to these changes.

VGM Scores

At this time, U.S. Bancorp has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, U.S. Bancorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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