Purchase of investment bank gave US Bank a rapid boost

• Key takeaway: The acquisition of BTIG and a new card partnership with Amazon will generate more than $1 billion of annual revenue.
  
• Forward look: U.S. Bank intends to expand its branch network in selected high-growth markets, increasing annual branch spending by $100 million annually.
  
• Expert quote: "I don't think we've hit the bottom yet." — Chief Financial Officer John Stern on the company's declining level of problem loans.
  

U.S. Bancorp appears to have had good timing on its approximately $1 billion acquisition of investment bank BTIG.

The $725.9 billion-asset, Minneapolis-based regional completed the deal on June 1. The freshly minted subsidiary, which has headquarters in New York and San Francisco, responded by generating $98 million of revenue that month. It was the strongest monthly revenue performance in BTIG's history, according to U.S. Bancorp CEO Gunjan Kedia.

The June revenue figure "outpaced our earlier expectation from the deal." Kedia told analysts Thursday. "As integration progresses, we expect to capture more long-term strategic benefits from the combination."

Going forward, U.S. Bank, the company's banking subsidiary, is targeting a $200 million quarterly revenue contribution from BTIG. The added cash should push capital markets past 10% of total revenue, up from 7% today, Kedia said.

U.S. Bancorp won't need to expand BTIG's staff or product set, or make additional acquisitions to reach its 10%-of-revenue goal, Kedia added. The company believes it can benefit from promoting BTIG's investment banking services to its existing customers.

"BTIG is being invited into the relationships we already have," Kedia said. "We don't really anticipate a massive expansion of head count. It's just cross-selling and getting our fair share of the fee revenue."

Other banks have also leaned into the capital-markets business in recent months, reacting to heightened demand for investment-banking services, including merger-and-acquisition support. The $160.7 billion-asset Regions Financial in Birmingham, Alabama, acquired Frazier Lanier, an Alabama-based investment bank, earlier this month. In a similar move, the $35.3 billion-asset Kansas City, Missouri-based Commerce Bancshares announced the planned acquisition of a St. Louis-based boutique middle-market investment bank, Nolan and Associates, in June.

Branch build-out

The capital markets revenue growth comes as U.S. Bank prepares to take over as the issuer of Amazon's Business and Business Prime credit cards from American Express. The handoff, scheduled for mid-August, should add $75 million of quarterly revenue for U.S. Bank, Chief Financial Officer John Stern said on the conference call.

U.S. Bank is also planning to focus more on traditional banking activity, its branch network. Kedia said Thursday. The bank plans to increase its annual branch spending by $100 million to $300 million, in an effort to raise its profile in high-growth markets such as Nashville; Phoenix; Provo, Utah; and Des Moines, Iowa.

"Historically, we've had strong brand recognition, but our branches have been in low-growth parts of towns," Stern told American Banker following the conference call. "We're trying to represent ourselves in areas that are more visible."

While both Stern and Kedia declined to discuss a timeline or how many new branches U.S. Bank plans to open, they said the added investment is part of a broader strategy to optimize its consumer-banking franchise, which produces the lion's share of the company's $532.1 billion-asset deposit base.

U.S. Bank currently operates 2,061 branches in 26 states.

The twin revenue boosts from BTIG and the Amazon partnership prompted U.S, Bancorp to revise its 2026 revenue guidance. It is now projecting full-year net revenue growth of between 7% and 9%, up from the prior range of 4% to 6%.

U.S. Bank provided the updated revenue target as part of its second-quarter financial results. The company reported net income of $2.18 billion, up 20% from the same three months in 2025.

In a research note, Citi analyst Ben Gerlinger called it "another strong quarter," with average loans and deposits increasing. Meanwhile, RBC Capital Markets analyst Gerard Cassidy wrote in his research note that U.S. Bank "posted strong second-quarter results." He highlighted record quarterly net revenue of $7.7 billion, up 10% from the second quarter in 2025.

Like a number of other early reporting banks, including Wells Fargo and M&T Bank, U.S. Bank reported improved credit quality. Its second-quarter net charge-off ratio of 0.53% was down six basis points from the same period last year, reflecting fewer losses in the commercial real estate and credit-card portfolios.

Lower levels of problem loans "has been a nice trend over the past few years," Stern told American Banker.

"I do think there is room for improvement," he added. "I don't think we've hit the bottom yet."