U.S. Bancorp (NYSE:USB) shares are trading lower after it reported first-quarter FY24 results.

Revenue stood at $6.7 billion (-6.4% Y/Y), which aligns with the consensus. Net interest income (taxable-equivalent basis) fell 14.0% Y/Y to $4.0 billion due to the impact of higher interest rates on deposit mix and pricing.

Meanwhile, Non-interest income rose 7.7% Y/Y to $2.7 billion, aided by higher fee revenue across most categories.

The net interest margin was 2.70%, compared with 3.10% in the year-ago period. Adjusted earnings per share totaled $0.90, beating the consensus of $0.88.

The provision for credit losses for the first quarter of 2024 was $553 million, up 29.5% Y/Y, due to normalization in the credit environment.

The company recorded an average total loan decline of 0.5% Y/Y and an average total deposit growth of 0.1% on a linked quarter basis. The company reported a CET1 capital ratio of 10.0% as of March 31, 2024, compared with 9.9% on December 31, 2023.

Andy Cecere, Chairman, President and CEO said, “Diluted earnings per share of $0.90, as adjusted, excluded $(0.12) of notable items that included the last of our merger and integration-related charges related to the acquisition of MUFG Union Bank and an anticipated increase in the FDIC special assessment.”

“Our results benefited from good growth across our fee businesses driven by strong underlying client growth and activity, as well as prudent expense management. Despite a challenging interest rate environment and pressure on industry deposit levels, we again saw growth in consumer deposits during the quarter.”

Outlook: USB cut FY24 net interest income (taxable-equivalent basis) guidance to $16.1 billion-$16.4 billion from the previously expected $16.6 billion+.

For the second quarter, USB expects net interest income (taxable-equivalent basis) to be relatively stable sequentially.

Also Read: Banks Will Shine In 2025, Analyst Says, But Can They Dodge Loan Losses?

Investors can gain exposure to the stock via IShares U.S. Regional Banks ETF (NYSE:IAT) and First Trust Nasdaq Bank ETF (NASDAQ:FTXO).

Price Action: USB shares are trading lower by 3.05% to $39.75 premarket on the last check Wednesday.

Photo by JHVEPhoto via Shutterstock

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