What are the key drivers behind the accelerating fee growth, what's the expected year-over-year growth rate for fees, and can you provide more details on the strong loan growth observed this quarter?

Accelerating fee growth is driven by a rebound in corporate payments due to new business installations, strong card growth (including the upcoming Amazon book), and a diversified 'four-legged stool' of capital markets, payments, trust/investment, and consumer fees. Full-year fee growth is expected to be in the low teens, with over 4 points from BTIG. Loan growth was strong and broad-based across C&I, commercial real estate, and credit card, with good pipelines, and is expected to exceed mid-single-digit growth. “This is a very important part of our strategy. It's a defining feature of our banking franchise. We closed -- this quarter, we were at 44% fee revenue. That gives us enormous stability, both of earnings and depth in our relationship.”

Could you provide insights into deposit trends this quarter, the outlook for deposit growth, costs, and mix in the second half, and the broader drivers for achieving the 3% NIM target by 2027?

Q2 deposit trends showed typical seasonality with commercial outflows offset by strong consumer deposit growth. Management expects deposit growth to parallel loan growth in the second half. Deposit rates increased slightly, with future changes dependent on loan growth. The path to a 3% NIM by 2027 remains unchanged, driven by asset mix and fixed asset repricing, with the speed influenced by deposit costs and the shape of the yield curve. “We continue to see a path on the 3% journey here at some point in 2027. Not much has changed really since I think the last time we talked here some time ago, it was good to see the NIM go up this quarter. We expect that to continue to progress.”

Given the ROA is at the higher end of the guidance, is the goal to push towards the 1.35% target? Also, what is the timing for increased buybacks (approaching 10% CET1), and are there plans for more BTIG-like tuck-in deals?

Management is pleased with current returns and aims to continuously improve metrics, moving towards the higher end of their target ranges. They are in the 'last lap' of capital build, prioritizing loan growth. Buybacks are anticipated to increase to the 70-75% payout range as the CET1 ratio approaches 10%. No further capital markets bolt-ons are expected, as BTIG completes their offering, with future growth being organic. The company will continue to look for accretive, localized tuck-in deals in other product areas. “I would say that we would anticipate to increase the buybacks and glide into that 70% to 75% range, which we're very committed to as we approach that 10% -- approximately that 10% level.”

USB

U.S. Bancorp (USB) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 16, 2026

Source: earnings call transcript

Executive summary

U.S. Bancorp Q2 FY26 — Record Revenue and Strong Operating Leverage

U.S. Bancorp delivered strong Q2 FY26 results, with record net revenue and a significant increase in EPS, driven by its diversified business mix and strategic execution. The company achieved substantial positive operating leverage and robust returns, while successfully integrating the BTIG acquisition and expanding its consumer deposit franchise. Management remains focused on sustaining profitability and accelerating growth, with a clear path to improving returns and capital levels.

Highlights

Earnings per share of $1.35, an increase of approximately 22% year-over-year.
Record net revenue of $7.7 billion, representing 10.1% growth year-over-year.
Achieved 400 basis points of positive operating leverage this quarter.
Return on tangible common equity of 18.7% and return on average assets of 1.26%.
Tangible book value per common share eclipsed $30, increasing more than 13% year-over-year.

Concerns

Merchant processing growth slowed, impacted by softness in Europe and loss of nonstrategic distribution partners, with impact expected for the next 3 quarters.

Guidance & targets

Category	Target	Timeline	Confidence
Net interest income growth	4% to 6% high materiality	Q3 · FY26	High
Total fee revenue growth	12% to 14% high materiality	Q3 · FY26	High
Noninterest expense growth	approximately 8% medium materiality	Q3 · FY26	High
Core expense growth (excluding BTIG)	approximately 3.5% medium materiality	Q3 · FY26	High
Reserve build related to Amazon Small Business portfolio purchase	$160 million medium materiality	Q3 · FY26	High
Total net revenue growth	7% to 9% high materiality	Full Year 2026 · FY26	High
Total net revenue growth (excluding BTIG)	5% to 7% high materiality	Full Year 2026 · FY26	High
Positive operating leverage	approximately 200 basis points high materiality	Full Year 2026 · FY26	High
Positive operating leverage (excluding BTIG)	more than 300 basis points high materiality	Full Year 2026 · FY26	High
Net interest income growth	north of 5% high materiality	Full Year 2026 · FY26	Medium
Net interest margin	3% high materiality	2027 · FY27	Medium
Share buyback payout range	70% to 75% high materiality	Ongoing	High
BTIG contribution margin	15% medium materiality	Remainder of FY26	High
BTIG contribution margin	20% medium materiality	Over time	Medium
BTIG integration costs	$60 million medium materiality	FY26	High

USB operating KPIs by quarter

USB operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Sep 2026 Q3 FY26	Change vs prior quarter
Common equity tier 1 ratio (CET1)	10.6% On the bottom right of the slide, you can see that our CET1 capital ratio increased 10 basis points from the prior quarter to 10.6%. Source: earnings call transcript	10.8% Our CET1 capital ratio increased 20 basis points to 10.8% this quarter as we continue to balance ongoing capital accretion with modest share repurchases. Source: earnings call transcript	10.9% As of September 30, our common equity Tier 1 capital as a percentage of risk-weighted assets was 10.9%, a 20 basis point increase linked quarter. Source: earnings call transcript	10.8% As of December 31, our common equity Tier 1 capital ratio was 10.8% or 9.3%, including AOCI. Source: earnings call transcript	10.8% As of March 31, our common equity Tier 1 capital ratio was 10.8%, or 9.3% including AOCI. Source: earnings call transcript	10.8% As of June 30, our common equity Tier 1 capital ratio was 10.8% or 9.4%, including AOCI. Source: earnings call transcript	10.8% CET1 ratio remained stable at 10.8% and tangible book value per share was up 5.4% year-over-year. Source: earnings call transcript	0 pt
Return on tangible common equity (ROTCE)	18.3% On an adjusted basis, we delivered an 18.3% return on tangible common equity and an improved efficiency ratio of 59.9% in the fourth quarter. Source: earnings call transcript	17.5% In the first quarter, we reported earnings per share of $1.03 and delivered a return on tangible common equity of 17.5%. Source: earnings call transcript	18.6% As the slide illustrates, each of our key profitability and efficiency ratios improved this quarter, highlighted by a return on average assets of 1.17% and a return on tangible common equity of 18.6%. Source: earnings call transcript	18.4% This quarter, we delivered a return on tangible common equity of 18.4%, a return on average assets of 1.19% and an efficiency ratio of 57.4% all improvements on a year-over-year basis. Source: earnings call transcript	17% Disciplined balance sheet management and strong returns drove a return on tangible common equity of 17%, while return on average assets was 1.15% this quarter. Source: earnings call transcript	18.7% We delivered strong returns, which includes a return on tangible common equity of 18.7% and a return on average assets of 1.26%. Source: earnings call transcript	—	+1.7 pt
Common equity tier 1 ratio (CET1) Including AOCI	—	8.8% Our CET1 ratio, including AOCI, was 8.8%. Source: earnings call transcript	—	9.3% As of December 31, our common equity Tier 1 capital ratio was 10.8% or 9.3%, including AOCI. Source: earnings call transcript	9.3% As of March 31, our common equity Tier 1 capital ratio was 10.8%, or 9.3% including AOCI. Source: earnings call transcript	9.4% As of June 30, our common equity Tier 1 capital ratio was 10.8% or 9.4%, including AOCI. Source: earnings call transcript	9.1% Adjusting for AOCI, the CET1 ratio declined 30 basis points to 9.1%. Source: earnings call transcript	-0.3 pt
Net interest margin	—	—	2.75% This quarter, we generated a very meaningful 530 basis points of positive operating leverage, a return on average assets of 1.17% and a net interest margin of 2.75%. Source: earnings call transcript	2.77% Net interest margin increased 2 basis points sequentially to 2.77% as we look to achieve greater margin expansion in the medium term. Source: earnings call transcript	2.77% Net interest margin was flat linked quarter at 2.77% as core loan growth and stable deposit pricing were offset by elevated mortgage prepayments and somewhat tighter credit spreads. Source: earnings call transcript	2.79% Net interest margin improved 2 basis points sequentially to 2.79%. Source: earnings call transcript	2.84% Loans grew 1.0% and deposits grew 2.2% sequentially, while the net interest margin expanded 5 basis points to 2.84%. Source: earnings call transcript	0 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
Banks Smartly	update	Introduced 2024
Business Essentials	launch	Recently introduced

Deals & partnerships

BTIG acquisition

Successful completion of the BTIG acquisition, marking a significant milestone in the strategic build-out of capital markets. BTIG brought equity trading and advisory businesses to complement existing FICC business, creating a complete offering.

Amazon portfolio_purchase $1.6 billion

Purchase of the Amazon Small Business portfolio. This is a very strategic deal, introducing U.S. Bancorp to the small business segment around a partner with a long-standing reputation. It is expected to be a platform for visionary product development and leveraging the partner platform for banking and credit card services.

Risks & headwinds

Merchant processing growth slowdown Next 3 quarters

Growth slowed

Mitigation:Focus on other parts of the payment complex (cards, corporate payments) to improve overall payment business performance.

Capital markets revenue volatility Ongoing

Capital markets fees can swing

Mitigation:Anticipate BTIG contribution of $200 million per quarter, but acknowledge potential for fluctuation due to market conditions.

Q&A highlights

Can you elaborate on the upgraded full-year revenue guidance, the NII trajectory, NIM outlook, and clarify the positive operating leverage targets, especially concerning BTIG's impact and contribution pacing?

Management expects full-year NII growth north of 5% and NIM to grow, with deposit costs remaining stable. They reaffirmed commitment to positive operating leverage, noting that the 200 bps target includes BTIG, while core operations aim for over 300 bps. BTIG's contribution margin is 15% for the remainder of the year, with $60M in integration costs, and is expected to improve over time. The $200M/quarter BTIG contribution is an anticipation, acknowledging capital markets volatility.

“We do expect our fees overall to be low teens from a full year perspective. and just likely over 4 points of that is going to be on the BTIG side of the equation.”

asked by L. Erika Penala · answered by John Stern

2 min read 6 chapters

Detailed narrative

Strategic Priorities and Execution

U.S. Bancorp delivered strong Q2 FY26 results, with earnings per share increasing 22% year-over-year and record net revenue of $7.7 billion, up 10.1% year-over-year. These results reflect significant progress against the company's three strategic priorities: accelerating revenue growth, maintaining expense discipline, and advancing payments transformation. The company achieved 400 basis points of positive operating leverage, demonstrating improved profitability and disciplined execution.

Fee Income Diversification and Growth

Fee income rose to 44% of total revenue this quarter, highlighting the strength and diversification of the company's fee mix. This growth is driven by a 'four-legged stool' approach, encompassing capital markets, payments, trust and investment management, and traditional consumer fees.

Management aims to achieve fee revenue in the higher 40s percentage of total revenue, which provides earnings stability and deepens client relationships, while maintaining an efficiency ratio in the 55-57% range.

Capital Markets Expansion with BTIG

The successful acquisition of BTIG marks a significant milestone in U.S. Bancorp's capital markets strategy. In its first month, BTIG generated approximately $98 million in revenue, exceeding initial expectations. This acquisition brought equity trading and advisory businesses, complementing the existing FICC business to offer a complete capital markets suite.

The strategic goal is to organically grow capital markets to more than 10% of total company revenue over time, leveraging existing client relationships for cross-selling opportunities.

Strength of the Consumer Franchise

The consumer franchise remains a core strength, serving nearly 13 million consumers, with 42% being multiservice clients, up approximately 2 percentage points over the past two years. Differentiated offerings like 'Banks Smartly,' introduced in 2024, have been highly successful, with balances across Smartly checking and savings now exceeding $84 billion.

This momentum has driven a third consecutive quarter of record consumer deposits, reinforcing long-term relationships and lower-cost funding.

Investment in Branch Network and Geographic Densification

U.S. Bancorp is increasing its annual investment in branches from $200 million to $300 million, focusing on new builds and densification within approximately 10 high-household-formation markets in its existing footprint. The refurbishment of the branch network is largely complete, allowing for a strategic shift towards growth-focused expansion.

These investments are expected to yield quick returns, particularly in areas where the brand is already established, aiming for a top-four depositor position in these regions.

Strategic Amazon Partnership

The acquisition of the Amazon Small Business portfolio is a highly strategic and economically attractive deal, introducing U.S. Bancorp to a significant small business segment through a robust partner. This partnership is viewed as a platform for visionary product development, exploring how card, banking, and ancillary services can be provided to Amazon's ecosystem of small businesses.

The company anticipates leveraging this platform to enhance its own small business offerings and potentially other deals, with further insights expected post-conversion.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.