U.S. Bancorp (NYSE:USB) executives used the company’s fourth-quarter 2025 earnings call to highlight stronger earnings, improving revenue trends across both net interest income and fees, and what management described as steady progress on expense discipline and strategic priorities heading into 2026.
Quarterly results: EPS growth, record revenue and positive operating leverage
Chief Executive Officer Gunjan Kedia said the bank delivered fourth-quarter earnings per share of $1.26, which she described as an approximately 18% year-over-year increase on an adjusted basis. Kedia said net interest income (NII) increased 3.3% year-over-year, supported by “strong consumer deposit growth,” while fee revenue rose 7.6% year-over-year, with “broad-based strength across most of our fee businesses.”
CFO John Stern reiterated the quarter’s record revenue and said results were supported by “improved spread income,” while “all fee categories performed well.” Stern also said tangible book value per common share increased 18.2% year-over-year as of Dec. 31.
Balance sheet and margin trends: deposit mix and loan growth in focus
Stern reported total average deposits increased 0.7% from the prior quarter to $515 billion. He said the bank is emphasizing growth in consumer and relationship-based deposits, and noted that non-interest-bearing deposits increased both sequentially and year-over-year. Non-interest-bearing deposits were about 16% of total average deposits.
Average loans totaled $384 billion, up 1.4% from the prior quarter. Stern said the bank’s focus areas of commercial and credit card lending grew 10.1% and 5.7% year-over-year, respectively, and now represent about 48% of total loans (up from about 45% last year). The investment portfolio ended the quarter at $171 billion.
On profitability drivers, Stern said fourth-quarter NII on a fully taxable equivalent basis totaled $4.3 billion, up 1.4% sequentially, “primarily driven by a favorable deposit mix shift.” Net interest margin rose two basis points to 2.77%.
In the Q&A, Stern said the bank still sees “a path to 3% in 2027” for net interest margin, citing balance sheet mix, fixed asset repricing, and continued deposit mix improvement as key drivers. He added that the bank’s outlook already incorporates the impact of moving to a full liquidity coverage ratio.
Fees, payments, and “interconnected” growth strategy
Management repeatedly emphasized the franchise’s fee diversification. Kedia said fee income represented 42% of total net revenues in 2025 and rose 6.7% year-over-year for the full year. Stern said total fee income in the fourth quarter was about $3.05 billion, up 7.6% year-over-year, supported by payments, institutional and consumer fee businesses.
Kedia also highlighted global fund services (GFS) as a capital-efficient growth business serving institutional clients in the U.S. and Europe. She said GFS total net revenue has grown at an 11% compound annual growth rate since 2021 and rose 12% in 2025. Kedia said the bank onboarded “nearly half of all new U.S. ETF launches in 2025,” citing continued investor demand for ETFs and regulatory changes, along with innovation in digital assets and derivative-based ETF products.
Payments were another major theme. Kedia described payments transformation as a “strategic and long-term priority,” emphasizing that payments are often the first and most frequent client engagement, particularly for younger customers. Stern later told analysts the bank expects mid-single-digit payments fee growth in 2026 across card and merchant, with corporate payments improving toward mid-single-digit growth by year-end as headwinds from government spending and corporate travel and entertainment ease.
Expense discipline, credit metrics, and capital return
Kedia said four “signature productivity programs” helped the bank deliver “nine straight quarters of largely stable expenses.” Stern reported non-interest expense of approximately $4.2 billion, up 0.7% sequentially as lower FDIC expense was partially offset by severance charges.
Credit quality improved, according to management. Stern said non-performing assets were 0.41% of loans and other real estate at Dec. 31, improving two basis points sequentially and seven basis points year-over-year. Net charge-offs improved to 0.54%, down two basis points sequentially, and allowance for credit losses totaled $7.9 billion, or 2.03% of period-end loans.
On capital, Stern said the Common Equity Tier 1 ratio was 10.8% (or 9.3% including AOCI) at quarter-end. Asked about buybacks, Stern said the bank intends to increase repurchases “in a gradual way,” starting this quarter, likely from about $100 million to $200 million, while moving over time toward its 75% payout target.
2026 outlook: revenue growth, operating leverage, and BTIG acquisition
For 2026, Stern guided to total net revenue growth of 4%-6% year-over-year and positive operating leverage of 200 basis points or more. He said the guidance excludes the impact of the BTIG acquisition, which the bank expects to contribute $175-$200 million of fee revenue per quarter.
For first-quarter 2026, management forecast:
- NII growth (FTE): 3%-4% year-over-year
- Total fee revenue growth: 5%-6% year-over-year
- Non-interest expense growth: approximately 1% year-over-year
On BTIG, executives framed the deal as filling a product gap in the bank’s capital markets lineup after what Kedia described as a decade-long partnership that included “350 deals or more” together. Stern said the transaction would have a 12 basis point impact on CET1 and “no impact” on the bank’s buyback plans. He added the deal is expected to be EPS neutral in the near term due to merger-related costs, but management expects improving economics once those costs are behind them.
Kedia also addressed broader industry change, pointing to possible shifts in capital, supervision, digital assets, AI, and novel bank charters. She told analysts the bank is taking digital assets seriously, noting custody capabilities for cryptocurrency and stablecoins, and said ETF launch activity tied to digital assets has contributed to revenue in a “very real way,” while payments-related stablecoin use cases remain more speculative.
About U.S. Bancorp (NYSE:USB)
U.S. Bancorp (NYSE: USB) is a bank holding company and the parent of U.S. Bank, a national commercial bank that provides a wide range of banking, investment, mortgage, trust and payment services. The company operates through consumer and business banking, commercial banking, payment services, and wealth management segments. Its product set includes deposit accounts, consumer and commercial lending, mortgage origination and servicing, credit and debit card services, treasury and cash management, merchant processing, and institutional and trust services.
Headquartered in Minneapolis, Minnesota, U.S.
