Decent Loan Demand to Aid U.S. Bancorp's Q1 Earnings, Lower NII to Ail

U.S. Bancorp USB is scheduled to report first-quarter 2025 results on April 16, 2025, before the opening bell. The company is expected to have witnessed year-over-year increases in quarterly revenues and earnings.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.In the fourth quarter, U.S. Bancorp benefited from higher non-interest income. However, a weak asset quality was concerning.USB has an impressive earnings surprise history. Its earnings beat estimates in the trailing four quarters, the surprise being 1.79%, on average.U.S. Bancorp Price and EPS Surprise  U.S. Bancorp price-eps-surprise | U.S. Bancorp QuoteFactors Influencing U.S. Bancorp’s Q1 PerformanceNII: The Federal Reserve kept interest rates unchanged at 4.25-4.5% in the first quarter of 2025 after cutting those last year. This is likely to have had some positive impacts on USB’s NII, given relatively lower funding costs.Management expects NII for the first quarter of 2025 to be relatively stable compared with the fourth quarter’s reported figure.The consensus estimate for NII is pegged at $4.01 billion, indicating a 1.2% decrease from the prior quarter’s reported figure. Loans: Given the uncertainty related to Trump’s tariff plan, the lending scenario was not very impressive in the first quarter. Per the Federal Reserve’s latest data, the demand for commercial and industrial loans, and commercial real estate loans in the first two months of the quarter was decent. As a result, USB’s lending activity is expected to have seen some improvement.The Zacks Consensus Estimate of $614.9 million for average earning assets indicates a marginal sequential increase.Non-Interest Income:  The first quarter witnessed heightened market volatility and client activity because of uncertainty related to Trump’s tariff plans. Also, volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange.In the first quarter of 2025, trading volumes across equity derivatives and corporate bonds exhibited growth, reflecting heightened market activity and investor engagement. The Zacks Consensus Estimate for commercial product revenues is pegged at $372.7 million, indicating an increase of 2.4% from the prior quarter’s reported figure.The Mortgage rates in the first quarter of 2025 did not decline significantly and hovered at nearly 7% despite the central bank's interest rate cuts. As such, refinancing activities and origination volumes witnessed decent growth. Thus, U.S Bancorp's mortgage banking fees are likely to have seen some improvement.The Zacks Consensus Estimate for mortgage banking revenues is pegged at $144.6 million, which increased 24.7% from the prior year’s reported figure. The Zacks Consensus Estimate for income from card revenues is pegged at $400.8 million, indicating a decline of 7.4% from the prior quarter’s reported figure.The consensus mark for trust and investment management fees is pegged at $715.4 million, indicating a rise of 1.7% from the prior year’s reported figure.Overall, the Zacks Consensus Estimate for total non-interest income is pegged at $2.79 billion, indicating a year-over-year fall of 1.2%. Expenses: Higher costs related to compensation, employee benefits, and net occupancy are expected to keep the expense base elevated in the first quarter. Yet, the company’s focus on prudent expense management is likely to have offset the increase.Management projects adjusted total non-interest expenses to be relatively stable from the prior-quarter reported level.Asset Quality: The company is likely to have set aside a substantial amount of money for potential bad loans, given the expectations of a higher for longer interest rate backdrop and tariff-related uncertainty.The Zacks Consensus Estimate for non-performing loans is pegged at $1.84 billion, indicating a rise of 2.4% from the prior quarter’s reported figure.What the Zacks Model Unveils for USBPer our proven model, the chances of U.S. Bancorp beating estimates this time are high.  The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the case here, as you can see below. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Earnings ESP: U.S. Bancorp has an Earnings ESP of +0.94%.Zacks Rank: USB currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for first-quarter earnings of 99 cents has been unchanged in the past seven days. The figure indicates an increase of 10% from the year-ago reported number.The consensus estimate for first-quarter 2025 revenues is pegged at $6.92 billion, indicating a rise of 3.6% from the year-ago reported figure.Other Stocks to ConsiderHere are a couple of other bank stocks that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this time around.The Earnings ESP for First Horizon Corporation FHN is +3.80% and it carries a Zacks Rank #3 at present. The company is slated to report first-quarter 2025 results on April 16.Over the past seven days, the Zacks Consensus Estimate for FHN’s quarterly earnings has been unchanged at 40 cents.Truist Financial TFC is scheduled to announce first-quarter 2025 results on April 17. The company carries a Zacks Rank #3 at present and has an Earnings ESP of +0.15%.Quarterly earnings estimates for TFC have been revised 1.1% lower to 86 cents over the past week.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report U.S. Bancorp (USB): Free Stock Analysis Report First Horizon Corporation (FHN): Free Stock Analysis Report Truist Financial Corporation (TFC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks