Higher Expenses to Hurt U.S. Bancorp's Q4 Earnings, Fee Income to Aid

Earnings Overview - U S Bancorp is scheduled to report Q4 2024 results on Jan 16 2025 with expected year-over-year growth in revenues and earnings [1] - The Zacks Consensus Estimate for Q4 2024 revenues is $7 02 billion indicating a 4 26% increase from the prior year [14] - The consensus estimate for Q4 earnings is $1 06 reflecting a 7 1% rise from the year-ago figure [14] Net Interest Income (NII) - The consensus estimate for Q4 NII is $4 15 billion showing a marginal increase from the prior year [2] - Management expects Q4 NII to remain relatively stable compared to Q3 2024's $4 17 million [6] - Federal Reserve rate cuts in Q4 2024 likely supported NII by reducing funding deposit costs [6] Loan Performance - Growth in commercial and industrial loans and consumer loan demand positively impacted the lending book [5] - Commercial real estate loan demand remained subdued partially offsetting growth [2][5] - The Zacks Consensus Estimate for average earning assets is $608 8 million indicating a marginal year-over-year increase [5] Non-Interest Income - Q4 2024 saw robust client activity and market volatility driven by strong economic growth and slowing inflation [3] - The Zacks Consensus Estimate for total non-interest income is $2 86 billion reflecting a 6 1% year-over-year rise [10] - Mortgage banking fees likely improved due to decent growth in refinancing activities and origination volumes despite higher mortgage rates [8] - Card revenues are expected to increase by 4 7% to $446 1 million driven by higher consumer spending [9] - Trust and investment management fees are estimated at $679 2 million up 1 8% year-over-year [10] - Commercial product revenues are expected to decline by 3 5% to $383 million [7] Expenses and Asset Quality - Elevated expenses due to technology modernization and higher compensation employee benefits likely impacted the bottom line [11] - The company likely set aside substantial provisions for potential bad loans given the higher-for-longer interest rate environment [11] - The Zacks Consensus Estimate for non-performing loans is $1 88 billion indicating a 4 1% rise from the prior year [12] Market Activity - Trading volumes in equity derivatives and corporate bonds exhibited significant growth in Q4 2024 reflecting heightened market activity [7] - Mortgage rates in Q4 2024 were 6 8% slightly higher than Q3 2024's 6 2% [8] Earnings Surprise History - U S Bancorp has a strong earnings surprise history beating estimates in each of the trailing four quarters with an average positive surprise of 1 55% [4] Earnings ESP and Zacks Rank - U S Bancorp has an Earnings ESP of -0 43% and a Zacks Rank of 2 indicating lower chances of beating estimates this quarter [15][14]