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.

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.