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What to Expect From U.S. Bancorp (USB) This Earnings Season?
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U.S. Bancorp (USB - Free Report) is scheduled to report first-quarter 2022 earnings results on Apr 14, before the opening bell. While USB’s earnings are likely to have declined year over year, revenues are expected to have improved in the first quarter 2022.
Before we analyze the factors that might have impacted the first-quarter earnings, let’s look at U.S. Bancorp’s performance over the last few quarters.
In the last-reported quarter, USB’s earnings lagged the Zacks Consensus Estimate on lower revenues and escalating expenses. Nonetheless, growth in loan and deposit balance, and a strong capital position were encouraging factors.
U.S. Bancorp has a decent surprise history. Earnings surpassed estimates in three of the trailing four quarters and missed the mark in the remaining one, the average surprise being 18.4%.
USB’s activities in the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for first-quarter earnings of 94 cents has moved 2.1% south in the past 30 days. Also, the figure indicates a 35.2% decline from the year-ago reported figure. Nonetheless, the consensus estimate for revenues is pegged at $5.56 billion, suggesting growth of 2.2% from the year-ago reported figure.
Key Factors to Impact Q1 Results
Net Interest Income (“NII”): In March, the Federal Reserve hiked short-term interest rates by 25 basis points. Ongoing economic expansion is expected to have supported the lending environment in the quarter under review. Amid this, loan growth is anticipated to have improved. Per the Fed’s latest data, loan demand, particularly residential real estate loans, credit cards and other revolving plans, besides commercial and industrial loans, remained strong in January and February compared to fourth-quarter end. Also, commercial real estate loans (comprising a notable part of USB’s loan portfolio) improved in February. Hence, the company’s loan balances are likely to have improved in the quarter under review.
The Zacks Consensus Estimate of $531.8 billion for the quarterly average interest-earning assets indicates a 1.8% sequential improvement. The estimate for fully-taxable equivalent (“FTE”) NII suggests a sequential 0.8% increase to $3.18 billion. According to the first-quarter 2022 outlook provided by the management, FTE NII and net interest margin ("NIM") are expected to be relatively stable sequentially.
However, the momentum is likely to have been affected as the first quarter is seasonally slow for loan originations. Further, flattening of the yield curve (the difference between short and long-term interest rates) is likely to have affected the bank’s NIM.
Non-Interest Income: While 2022 started on a positive note, the onset of the Russian-Ukraine war dampened the market performance. However, implied interest rate, FX and commodity volatility spiked up in the last month of the quarter. This is likely to have set the stage for robust interest rates, commodities and FX product volumes, which may have affected USB’s trading business. The Zacks Consensus Estimate for U.S. Bancorp's commercial product revenues indicates a 2.3% sequential rise.
Mortgage rates increased sequentially in the to-be reported quarter. Also, mortgage origination activities are estimated to have decreased dramatically, with the rising rates dismaying refinancing activity. The Zacks Consensus Estimate for mortgage banking revenues is pegged at $2.33 billion, suggesting a 21.8% drop from the prior quarter’s reported number. Further, management expects mortgage revenues to be slightly lower in the first quarter, sequentially, due to slower refinancing activity.
Despite the raging inflation, card fees are likely to have improved on higher consumer spending, owing to reopening of the economy post pandemic. Also, demand for online payment of products and services is expected to have been decent. However, the consensus estimate for credit and debit card fees of $350 million depicts an 8.4% sequential decline. Management also expects payments revenues to be reasonably lower in the first quarter.
Deposits slowed in the quarter, likely due to a decrease in government aids and consumer savings. These are likely to have resulted in lower revenues from service charges on deposits.
The Zacks Consensus Estimate for the total non-interest income is pegged at $2.4 billion, suggesting a 5.5% fall from the prior quarter’s reported number.
Expenses: While the absence of considerable legal expenses is encouraging, increased investments in technology to improve digital offerings might have moderately escalated costs. This is expected to have limited bottom-line growth in the first quarter. In the first quarter of 2022, the company anticipates witnessing relatively stable expenses compared with the fourth-quarter 2021 level.
Here is What Our Quantitative Model Predicts:
U.S. Bancorp does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: U.S. Bancorp has an Earnings ESP of -0.62%. Zacks Rank: U.S. Bancorp currently carries a Zacks Rank of 3.
Stocks That Warrant a Look
Associated Bancorp (ASB - Free Report) , M&T Bank (MTB - Free Report) and State Street (STT - Free Report) are a few banking stocks that you might want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for ASB is +3.72% and the company carries a Zacks Rank #2 (Buy) at present. ASB is slated to report first-quarter 2022 results on Apr 21.
The Zacks Consensus Estimate for ASB’s first-quarter earnings has moved 2.9% north over the past week.
Image: Bigstock
What to Expect From U.S. Bancorp (USB) This Earnings Season?
U.S. Bancorp (USB - Free Report) is scheduled to report first-quarter 2022 earnings results on Apr 14, before the opening bell. While USB’s earnings are likely to have declined year over year, revenues are expected to have improved in the first quarter 2022.
Before we analyze the factors that might have impacted the first-quarter earnings, let’s look at U.S. Bancorp’s performance over the last few quarters.
In the last-reported quarter, USB’s earnings lagged the Zacks Consensus Estimate on lower revenues and escalating expenses. Nonetheless, growth in loan and deposit balance, and a strong capital position were encouraging factors.
U.S. Bancorp has a decent surprise history. Earnings surpassed estimates in three of the trailing four quarters and missed the mark in the remaining one, the average surprise being 18.4%.
U.S. Bancorp Price and EPS Surprise
U.S. Bancorp price-eps-surprise | U.S. Bancorp Quote
USB’s activities in the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for first-quarter earnings of 94 cents has moved 2.1% south in the past 30 days. Also, the figure indicates a 35.2% decline from the year-ago reported figure. Nonetheless, the consensus estimate for revenues is pegged at $5.56 billion, suggesting growth of 2.2% from the year-ago reported figure.
Key Factors to Impact Q1 Results
Net Interest Income (“NII”): In March, the Federal Reserve hiked short-term interest rates by 25 basis points. Ongoing economic expansion is expected to have supported the lending environment in the quarter under review. Amid this, loan growth is anticipated to have improved. Per the Fed’s latest data, loan demand, particularly residential real estate loans, credit cards and other revolving plans, besides commercial and industrial loans, remained strong in January and February compared to fourth-quarter end. Also, commercial real estate loans (comprising a notable part of USB’s loan portfolio) improved in February. Hence, the company’s loan balances are likely to have improved in the quarter under review.
The Zacks Consensus Estimate of $531.8 billion for the quarterly average interest-earning assets indicates a 1.8% sequential improvement. The estimate for fully-taxable equivalent (“FTE”) NII suggests a sequential 0.8% increase to $3.18 billion. According to the first-quarter 2022 outlook provided by the management, FTE NII and net interest margin ("NIM") are expected to be relatively stable sequentially.
However, the momentum is likely to have been affected as the first quarter is seasonally slow for loan originations. Further, flattening of the yield curve (the difference between short and long-term interest rates) is likely to have affected the bank’s NIM.
Non-Interest Income: While 2022 started on a positive note, the onset of the Russian-Ukraine war dampened the market performance. However, implied interest rate, FX and commodity volatility spiked up in the last month of the quarter. This is likely to have set the stage for robust interest rates, commodities and FX product volumes, which may have affected USB’s trading business. The Zacks Consensus Estimate for U.S. Bancorp's commercial product revenues indicates a 2.3% sequential rise.
Mortgage rates increased sequentially in the to-be reported quarter. Also, mortgage origination activities are estimated to have decreased dramatically, with the rising rates dismaying refinancing activity. The Zacks Consensus Estimate for mortgage banking revenues is pegged at $2.33 billion, suggesting a 21.8% drop from the prior quarter’s reported number. Further, management expects mortgage revenues to be slightly lower in the first quarter, sequentially, due to slower refinancing activity.
Despite the raging inflation, card fees are likely to have improved on higher consumer spending, owing to reopening of the economy post pandemic. Also, demand for online payment of products and services is expected to have been decent. However, the consensus estimate for credit and debit card fees of $350 million depicts an 8.4% sequential decline. Management also expects payments revenues to be reasonably lower in the first quarter.
Deposits slowed in the quarter, likely due to a decrease in government aids and consumer savings. These are likely to have resulted in lower revenues from service charges on deposits.
The Zacks Consensus Estimate for the total non-interest income is pegged at $2.4 billion, suggesting a 5.5% fall from the prior quarter’s reported number.
Expenses: While the absence of considerable legal expenses is encouraging, increased investments in technology to improve digital offerings might have moderately escalated costs. This is expected to have limited bottom-line growth in the first quarter. In the first quarter of 2022, the company anticipates witnessing relatively stable expenses compared with the fourth-quarter 2021 level.
Here is What Our Quantitative Model Predicts:
U.S. Bancorp does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: U.S. Bancorp has an Earnings ESP of -0.62%.
Zacks Rank: U.S. Bancorp currently carries a Zacks Rank of 3.
Stocks That Warrant a Look
Associated Bancorp (ASB - Free Report) , M&T Bank (MTB - Free Report) and State Street (STT - Free Report) are a few banking stocks that you might want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for ASB is +3.72% and the company carries a Zacks Rank #2 (Buy) at present. ASB is slated to report first-quarter 2022 results on Apr 21.
The Zacks Consensus Estimate for ASB’s first-quarter earnings has moved 2.9% north over the past week.
MTB is scheduled to release first-quarter results on Apr 20. MTB currently has a Zacks Rank #3 and an Earnings ESP of +2.08%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MTB’s first-quarter earnings has moved marginally downward over the past 30 days.
STT is scheduled to release earnings on Apr 14. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.97%.
The Zacks Consensus Estimate for STT’s first-quarter earnings has been revised 2.1% north over the past week.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.