Brisk loan growth, tight rein on expenses propel U.S. Bancorp

• Key Insight: Nonperforming assets declined year over year at U.S. Bancorp, mirroring the positive first-quarter trend 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

UPDATE: This article has been updated with comments from U.S. Bancorp Chief Financial Officer John Stern and analysts who cover the company.

U.S. Bancorp's first-quarter profit exceeded Wall Street's expectations as loan growth accelerated and the company delivered upside surprises on fee income and expense control.

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

"This looks like a solid quarter all around," Scott Siefers, an analyst who covers U.S. Bancorp for Piper Sandler, wrote Thursday in a research note. "Loan growth was very good, and fees [and] expenses beat expectations." 

Earnings per share of $1.18 were up 15% year over year, exceeding analysts' 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%. U.S. Bancorp's loan growth was broad-based, with commercial, commercial real estate and credit card lending all showing annual increases.

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 was exceptionally strong, as new-product penetration with longstanding clients and favorable market volatility combined to drive strong revenue growth," 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. Average consumer deposits of $270 billion represented a quarterly record, according to Kedia.

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.

The lender's credit-quality results were in line with the numbers disclosed by other large financial institutions. Wells Fargo, Bank of America and the Buffalo, New York-based M&T Bank also had solid credit performances, marked by declines in net charge-offs and nonperforming assets.

U.S. Bancorp reported a first-quarter loan-loss provision totaling $576 million, up 7% from the same period last year, with the reserve build attributed to loan growth, Citi analyst Keith Horowitz wrote in a research note.

"We're very pleased with the stability and just general improvement we're seeing in the credit book," Stern told American Banker in an interview following the conference call. "Virtually all the key indicators, like early stage delinquency or nonperforming assets, are all improved on a linked-quarter basis."

"That just shows how resilient the U.S. economy is right now," Stern added. "I think for the most part our peers are seeing the same thing, which is good."

U.S. Bancorp reported that it had 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.

"We'll have 700,000 co-brand clients that come along with that," Stern told American Banker. The partnership is expected to "add about $1.6 billion of small-business credit card loans, and we intend to grow that. We've got a lot of great products in mind, and we're really excited about the opportunity to work with Amazon.

"Small businesses currently generate about 9% of the bank's revenue and represent "a compelling long-term opportunity for us," Kedia said.