Growth in loans and fees pushes U.S. Bancorp's profits higher

• Key Insight: Nonperforming assets declined year-over-year at U.S. Bancorp, mirroring the first-quarter results at other large financial institutions
• Supporting data: U.S. Bancorp reported 1.4 million small business clients at the end of the first quarter. The company is looking to grow that number through a partnership with Amazon.
• Expert quote: "Disciplined expense management has become foundational to how we operate." — Chief Financial Officer John Stern

Minneapolis-based U.S. Bancorp reported a 13.6% jump in net income during the first quarter, with the increase driven by growth in both loans and fee income.

Earnings per share of $1.18 were up 15% year over year, exceeding investor expectations by four cents, according to S&P Capital IQ. Net revenue of $7.29 billion increased 4.7%.

"These results demonstrate continued execution within our medium-term financial target ranges and strong momentum across the franchise," CEO Gunjan Kedia said in a press release. "With disciplined risk management and consistent execution, we are positioned to deliver sustainable returns and long-term value."

The $701 billion-asset company reported first-quarter net income of $1.95 billion. Loans increased by 5%, and noninterest income rose by 5.7%.

Capital markets revenue totaled $377 million, up 29% from the previous-year first quarter. Other regional and money center banks, including JPMorganChase, Wells Fargo and Pittsburgh-based PNC Financial Services Group, reported similar upturns this week.

Capital Markets revenue at U.S. Bancorp "was exceptionally strong," Kedia said on a conference call with analysts. Meanwhile, trust and investment management fees increased 10% from last year to $745 million.

Revenue generated by U.S. Bancorp's payments business — a key strategic focus for the company — increased 3.9% from the first-quarter of 2025 to $1.24 billion, demonstrating "ongoing momentum," Chief Financial Officer John Stern said on the conference call.

Boosted by the growth in loans, net interest income totaled $4.3 billion, a 4.1% increase from 2025's first quarter. Deposits also increased, climbing 3% year-over-year to $528.2 billion on March 31.

Though U.S. Bancorp increased spending on marketing and technology during the three months ending March 31, compensation and benefits expenses remained largely level with the prior-year result. Overall operating expenses totaled $4.27 billion in the first quarter, an increase of less than 1% from the same period last year. The period-ending efficiency ratio was 58.2%, down from 60.8% a year ago.

"Disciplined expense management has become foundational to how we operate," Stern said.

While first-quarter net charge-offs of $546 million were virtually level with the 2025 figure, nonperforming loans declined 11.5%, totaling $1.53 billion on March 31.

U.S. Bancorp's credit-quality results were in line with numbers disclosed by other large institutions. Wells Fargo, Bank of America and the Buffalo, New York-based M&T Bank also reported solid credit performances, marked by declines in net chargeoffs and nonperforming assets.

"Credit quality remained stable, underscoring our clients' resilience in an uncertain environment," U.S. Bancorp's Kedia said.

U.S. Bancorp reported 1.4 million small business clients at the end of the first quarter, but Kedia said that number is expected to grow as U.S. Bank's parent company prepares to take over the management of Amazon's small business credit card portfolios from American Express later this year.

Small businesses currently generate about 9% of the bank's revenue and represent "a compelling long-term opportunity for us," Kedia said. Partnering with Amazon should "meaningfully expand our small business relationships," she added.