U.S. Bancorp Earnings: Firm Finished 2025 With Strong Fee Income Momentum

Key Morningstar Metrics for U.S. Bancorp

• Fair Value Estimate: $56.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of U.S. Bancorp’s Earnings

U.S. Bancorp USB reported strong fourth-quarter earnings, with fees growing by 8% year over year. The bank has delivered positive operating leverage in the past six quarters, and the fourth quarter’s adjusted efficiency ratio of 57.4% was in line with the bank’s medium-term target of mid to high 50s.

Why it matters: Net interest income expanded by 1.5% sequentially, and net interest margin grew by 2 basis points from the previous quarter. For 2026, the bank expects total revenue growth of 4%-6% and positive operating leverage of over 200 basis points, implying expense growth of 2% to 4%.

• The bank is expecting 3%-4% loan growth in 2026, which is better than the 1.7% growth in its average loans in 2025. Management expects commercial loans and credit cards to be the major drivers of loan growth, with commercial real estate also contributing.

The bottom line: As we incorporate the latest results and updated guidance, we expect to increase our $56 fair value estimate for wide-moat-rated U.S. Bancorp by low single digits from stronger near-term earnings growth, and we assess shares as slightly undervalued.

• We think the bank is continuing to make progress toward its medium-term targets. The full-year 2025 efficiency ratio was 58.6%, up by 370 basis points from a year ago and in line with its midterm target.
• Return on average assets was 1.12%. While still below its target of 1.15%-1.35%, it was much improved from 0.95% in 2024.

Long view: We like U.S. Bancorp’s diversified fee income franchise in payment and corporate trust businesses. The bank derived around 42% of its 2025 revenue from fee income (relatively less cyclical than spread-based net interest income), much higher than peer regional banks’ median of around 30%.

• We view the bolt-on acquisition of BTIG as complementary to its capital market franchise, enhancing its ability to capture a greater share of institutional client wallet through high-touch equity trading capabilities.