U.S. Bancorp Tops Q2 Estimates, Shares Bounce 3.2%

Shares of U.S. Bancorp (USB) jumped 3.2% to close at $58.82 on July 15 after the company reported better-than-expected Q2 results, topping both earnings and revenue estimates. The beat was driven by robust performances across all segments and improved credit quality aided by the economic recovery.

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The bank reported adjusted earnings of $1.28 per share, beating analysts’ expectations of $1.14 per share. Revenues of $5.78 billion exceeded the consensus estimate of $5.62 billion. (See USB stock charts on TipRanks)

Net interest income came in at $3.16 billion, up 2.4% sequentially due to better yields and volumes in the investment portfolio, while non-interest income grew 10% to $2.6 billion, mainly driven by higher payment services revenue and mortgage banking revenue.

Net interest margin was 2.53% in the quarter, up 3 bps sequentially but down 9 basis points from the year-ago period.

The provision for credit losses was a benefit of $170 million in the quarter while non-interest expenses were up 2.1% year-over-year at $3.4 billion.

The company reported average loans of $294.3 billion, down 7.5% from the prior-year quarter. However, average deposits surged 6.4% to $429.2 billion.

U.S. Bancorp CEO Andy Cecere commented, “As we head into the second half of 2021, we are well positioned to benefit from improving economic conditions; however, we are even more excited about the significant secular growth opportunities we see driving industry leading returns over the longer term.”

Following the upbeat Q2 results, Oppenheimer analyst Chris Kotowski assigned a Buy rating and the price target of $73 (24.1% upside potential) on the stock.

Kotowski commented, “As elsewhere we think the critical fact is that we are back on a growth footing after a long period of Covid-induced shrink.”

Overall, the stock has a Strong Buy consensus rating based on 6 Buys and 2 Holds. The average US Bancorp price target of $65.79 implies 11.9% upside potential from current levels. Shares of USB have jumped 56.6% over the past year.