On July 17, 2024, U.S. Bancorp (USB, Financial) released its 8-K filing for the second quarter of 2024, reporting earnings that surpassed analyst expectations. As a diversified financial-services provider, U.S. Bancorp is one of the nation's largest regional banks, with branches in roughly 26 states, primarily in the Western and Midwestern United States. The bank offers many services, including retail banking, commercial banking, trust and wealth services, credit cards, mortgages, and other payments capabilities.
Financial Highlights
U.S. Bancorp reported net income of $1,622 million and diluted earnings per common share of $0.98, adjusted for a $26 million notable item related to an increase in the Federal Deposit Insurance Corporation (FDIC) special assessment. This performance exceeded the analyst estimate of $0.95 per share. The company also reported net revenue of $6,867 million, surpassing the estimated $6,794.95 million.
Income Statement Overview
| Metric | 2Q24 | 1Q24 | 2Q23 |
|---|---|---|---|
| Net Interest Income (taxable-equivalent basis) | $4,052 million | $4,015 million | $4,449 million |
| Noninterest Income | $2,815 million | $2,700 million | $2,726 million |
| Net Income Attributable to U.S. Bancorp | $1,603 million | $1,319 million | $1,361 million |
| Diluted Earnings Per Common Share | $0.97 | $0.78 | $0.84 |
Balance Sheet and Cash Flow
U.S. Bancorp's average total loans increased by 1.0% on a linked quarter basis to $374,685 million, while average total deposits rose by 2.2% to $513,909 million. The company's CET1 capital ratio improved to 10.3% at the end of June 2024, up from 10.0% in March 2024.
Key Metrics
| Metric | 2Q24 | 1Q24 | 2Q23 |
|---|---|---|---|
| Return on Average Assets (%) | 0.97 | 0.81 | 0.81 |
| Return on Average Common Equity (%) | 12.4 | 10.0 | 10.9 |
| Net Interest Margin (%) | 2.67 | 2.70 | 2.90 |
| Efficiency Ratio (%) | 61.0 | 66.4 | 63.7 |
CEO Commentary
“In the second quarter, we posted diluted earnings per share of $0.98 and delivered a return on tangible common equity of 18.6%, both as adjusted. This quarter we generated $6.9 billion in net revenue driven by improved linked quarter net interest income, supported by healthy deposit growth, and continued momentum in leveraging our diversified fee income platform to deepen relationships. We continued to invest for the future while managing our operating expenses prudently, with both linked quarter and year-over-year declines in noninterest expense. This quarter, credit metrics continued to perform in line with expectations, and we believe our reserve levels are appropriate for future losses. All capital and liquidity ratios remain strong, and we increased our CET1 ratio by 30 basis points to end the quarter at 10.3% - a year-over-year increase of 120 basis points. As we head into the back half of this year, we are well-positioned with national scale, an interconnected business model and superior digital capabilities, to continue our delivery of industry leading returns over the long term. I would like to thank all our employees for their continued focus on best serving our clients, communities, and shareholders.”— Andy Cecere, Chairman and CEO, U.S. Bancorp
Performance Analysis
U.S. Bancorp's performance in Q2 2024 was marked by a notable increase in net income and earnings per share, driven by higher net interest income and deposit growth. The company's efficiency ratio improved significantly, reflecting effective cost management and operational efficiency. However, the net interest margin saw a slight decline, primarily due to the impact of higher interest rates on deposit mix and pricing.
Overall, U.S. Bancorp's strong financial performance and strategic initiatives position the company well for continued growth and profitability in the coming quarters. For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from U.S. Bancorp for further details.
