USB U.S. Bancorp 10-Q 2026-09-30 section summaries

U.S. Bancorp — Q3 2026 Form 10-Q

For the quarter ended September 30, 2026, U.S. Bancorp reported higher net interest and noninterest income, contributing to year-over-year growth in revenue and earnings. The filing also reported improved net interest margin and efficiency, alongside a higher provision for credit losses. Common shares outstanding were 1.558 billion at October 31, 2026.

Consolidated results

Q3 net interest income grew 5.8% and noninterest income grew 13.1%, lifting total net revenue 8.7%. Noninterest expense increased 7.1%, while provision for credit losses rose 14.5%. Net income attributable to the company increased 10.0%, and diluted EPS increased 9.8%. For the first nine months, total net revenue rose 7.9%; net income attributable to the company increased 14.5% and diluted EPS increased 15.8%.

Profitability, credit and operating indicators

Q3 return on average assets was 1.25%, compared with 1.17%; return on average common equity was 13.6%, compared with 13.5%; and return on tangible common equity was 18.5%, compared with 18.6%.

Average loans grew 8.0% and average deposits 2.9% year over year; average investment securities declined 4.1% and average long-term debt declined 11.4%.

Balance sheet and capital

The allowance for credit losses increased 2.7% from year-end 2025, while nonperforming assets declined 16.7%.

Risks and developments

The filing highlights risks from economic and financial-market deterioration, interest-rate changes, unemployment, weaker loan or collateral quality—including commercial real estate occupancy—and higher FDIC assessments. Other cited risks include tariffs and trade-policy changes, regulatory capital and liquidity requirements, litigation, competition and shifts in customer behavior. The company also identifies cybersecurity, technology and data-security disruptions, protection of personal information, and uncertainty about the costs and benefits of adopting AI and other emerging technologies. Climate-related physical and transition risks, geopolitical events, and execution of strategic plans are also noted.

U.S. Bancorp specifically identifies integration and execution risks related to its acquisition of Condor Trading LP and its subsidiaries, including BTIG. These include delays or failure to achieve expected benefits and the possibility that combination costs exceed expectations.

U.S. Bancorp — Q3 and first nine months of 2026

Consolidated results

Higher net interest and noninterest income drove earnings growth, partly offset by higher expenses and credit-loss provision. Net interest income rose 5.8% in Q3 and 5.9% for 9M. Taxable-equivalent net interest margin improved to 2.84% from 2.75% in Q3 and to 2.80% from 2.71% for 9M, reflecting repricing benefits and improved asset mix. Average earning assets increased 2.1% in Q3 and 2.3% for 9M year over year.

Noninterest income

*9M values are shown where the year-over-year growth rate differed materially from Q3. Noninterest income increased 13.1% in Q3 and 10.9% for 9M. Capital-markets growth reflected BTIG-related activity, higher syndication and client derivative activity; trust fees benefited from favorable markets. Higher payment, treasury and card sales volumes also contributed, as did higher equity investment gains in other income.

Expenses and credit

Expense growth reflected BTIG, merit increases, technology and product-development investment, and marketing initiatives. The efficiency ratio improved to 55.9% from 57.2% in Q3 and to 57.0% from 59.0% for 9M. The effective tax rate was 21.2% in Q3 versus 20.7%, and 20.1% for 9M versus 20.6%.

Provision for credit losses increased 14.5% in Q3 and 9.9% for 9M. The $135M initial provision on the acquired small-business card portfolio and loan growth were partly offset by an improved economic outlook and favorable credit performance. Net charge-offs declined $13M (2.4%) in Q3 and $32M (2.0%) for 9M; net charge-offs to average loans improved to 0.51% from 0.56% and to 0.53% from 0.58%, respectively. At September 30, the allowance was $8.2B, up from $7.9B at year-end, while allowance to period-end loans declined to 1.97% from 2.03%. Nonperforming assets fell $266M (16.7%) from year-end to $1.3B, mainly due to lower nonperforming commercial loans.

Lending, funding and securities

Loan growth was led by commercial, CRE and credit-card lending. Savings growth was concentrated in Consumer and Business Banking; time deposits are managed partly as an alternative funding source based on relative pricing and liquidity.

Loans increased $23.9B (6.1%) from year-end, including commercial +$12.4B (8.5%), CRE +$4.5B (9.3%), credit cards +$3.6B (9.4%), other retail +$2.5B (6.0%), and residential mortgages +$921M (0.8%). Credit-card growth reflected the small-business portfolio purchase and higher sales; CRE growth reflected commercial mortgage originations. Deposits rose $9.5B (1.8%): savings increased $15.9B (24.1%), partly offset by time deposits down $4.0B (8.3%) and money-market deposits down $2.7B (1.4%).

Investment securities declined with sales and maturities. Available-for-sale (AFS) securities had amortized cost of $87.881B and fair value of $80.228B, versus $95.038B and $90.838B at year-end. Their net unrealized loss widened to $7.3B ($5.5B after tax) from $4.4B ($3.3B after tax), primarily reflecting lower mortgage-backed securities fair values as interest rates changed. Management had no plans to sell securities in loss positions and considered a forced sale before recovery of amortized cost unlikely. Held-to-maturity securities had amortized cost of $72.923B and fair value of $59.380B. AFS weighted-average maturity rose to 6.5 years from 5.5 years and yield to 3.91% from 3.55%; amortized cost excludes portfolio-level hedge basis adjustments of $(341)M at September 30, 2026 and $185M at December 31, 2025.

Short-term borrowings rose mainly from higher short-term FHLB balances. Long-term debt declined chiefly from a $15.0B decrease in FHLB advances and maturities, partly offset by issuances of medium-term, bank, credit-linked bank and subordinated notes.

Capital and acquisition

The common equity tier 1 ratio was 10.8% at both September 30, 2026 and December 31, 2025; all regulatory capital ratios exceeded “well-capitalized” requirements. Dividends and repurchases returned $848M to shareholders in Q3 and $3.0B for 9M.

The BTIG acquisition closed June 1, 2026, for approximately $395M cash and 6.6M U.S. Bancorp shares, with up to $275M additional cash payable over three years subject to performance targets. BTIG adds institutional trading, investment banking, research and brokerage capabilities across Wealth, Corporate, Commercial and Institutional Banking.

Credit quality and portfolio trends

Credit quality improved overall through September 30, 2026, as nonperforming assets and delinquency measures declined despite loan growth. Lower commercial real estate and credit card losses drove lower net charge-offs, partly offset by higher commercial loan losses. The company’s allowance increased, reflecting loan growth and a small-business credit-card portfolio purchase, while improving credit quality and the economic outlook partly offset those factors.

NPAs fell $266M, or 16.7%, principally through resolution of commercial nonperforming loans. Commercial NPAs declined to $432M from $717M, while commercial real estate NPAs remained $518M; together, these categories fell to $951M from $1.235B. Residential mortgage NPAs increased to $176M from $151M, home equity and second-mortgage NPAs were stable at $136M, and residential mortgage, credit card and other retail NPAs collectively rose to $373M from $355M. For 9M 2026, NPA additions of $598M were outweighed by $864M of reductions, a net reduction of $266M. Reductions included $409M of charge-offs, $284M of paydowns/payoffs and $113M of net sales; these are NPA roll-forward amounts, not period net charge-offs.

Past-due ratios of 90 days or more improved across total loans (0.18% from 0.22%), commercial real estate (0.01% from 0.03%), residential mortgages (0.19% from 0.25%), credit cards (1.10% from 1.27%) and other retail (0.10% from 0.12%). Credit card 30–89-day past-due balances increased to $562M from $511M, although the ratio was nearly flat at 1.35% versus 1.34%; 90+-day balances declined to $457M from $483M.

GNMA pool loans are excluded from the company’s reported residential mortgage delinquency ratios. These loans totaled $3.4B at September 30, 2026, versus $3.5B at December 31, 2025, and repayments are primarily FHA-insured or VA-guaranteed. Including them, residential mortgages 90 days or more past due and nonperforming were 3.23% and 3.37%, respectively, compared with reported ratios excluding them of 0.34% and 0.38%. Foreclosed GNMA loans of $86M, up from $65M, continue accruing interest and are excluded from NPAs because they are insured or guaranteed.

Allowance and estimation

The allowance rose $218M, or 2.7%, from year-end. The Q3 small-business credit-card portfolio purchase added $135M of initial provision for acquired loans and $55M of acquired allowance. During 9M, commercial allowance decreased $130M while consumer allowance increased $348M, primarily reflecting the acquired card portfolio and loan growth. The portfolio included $1.5B net book value of purchased-credit-deteriorated loans, primarily from the MUFG Union Bank acquisition.

The allowance is based on lifetime expected-loss models using multiple economic scenarios over a three-year reasonable-and-supportable forecast, followed by a reversion to adjusted long-term historical loss experience. Management adds qualitative overlays for model and forecast uncertainty, emerging risks, borrower conditions and portfolio changes; actual losses may differ significantly from estimates. September 2026 scenarios ranged from 3.6% to 9.4% unemployment, with a 5.7% peak weighted-average rate. Baseline unemployment assumptions for Q3 2026, Q4 2026 and Q3 2027 were 4.3% each, versus 4.5%, 4.4% and 4.4% in the December 2025 forecast. Corresponding baseline real GDP year-over-year growth assumptions were 1.6%, 2.0% and 2.2%, compared with 1.5%, 1.8% and 2.0%.

Portfolio practices and risks

Residential mortgage originations generally target prime borrowers; 88.4% of residential mortgages had LTV of 80% or less, 0.3% exceeded 100% LTV, and 6.7% were GNMA pool loans. For home equity and second mortgages, 95.5% had LTV/CLTV of 80% or less and 0.2% exceeded 100%. Among consumer credit-card balances with available scores, 87% had scores of 660 or higher. The company describes centralized underwriting, ongoing review, diversification and Board and management oversight. Loan-loss assessments consider borrower, industry and geographic factors and macroeconomic conditions, including unemployment, property values, interest rates and household debt. Effective January 1, 2026, small-business credit-card loans were reclassified from commercial loans to credit-card loans, with prior-period disclosures conformed. Selling residential loans into secondary markets while retaining servicing can reduce credit and asset/liability risks.

Economic uncertainty—including interest rates, inflation and geopolitical developments—could affect corporate and consumer borrowers. Other identified risks include high transaction volumes, systems and third-party dependencies, cybersecurity threats, and compliance requirements covering BSA/AML, sanctions and consumer protection. Short-term modifications may reduce or defer consumer payments; commercial modifications commonly extend maturity by three months or less for borrowers considered able to repay contractual amounts. No significant change in leased-asset residual values or portfolio concentrations was reported since December 31, 2025.

Risk oversight and interest-rate exposure

The Board approves U.S. Bancorp’s strategic plan, while management develops and executes it. Strategic Risk Management provides independent second-line review and challenge. The Asset and Liability Committee (ALCO) reviews net-interest-income (NII) sensitivity monthly and oversees asset/liability management within Board-approved policies.

USB described itself as modestly asset-sensitive at September 30, 2026: in a parallel 50-basis-point move, assets were expected to reprice faster than liabilities. Modeled 12-month NII sensitivity was:

These estimates reflect the rate outlook, actual and projected balance sheets, investments and hedging. Results are also sensitive to growth, product mix, customer behavior, deposit pricing and funding decisions. Larger shocks may produce nonlinear mortgage-asset and deposit responses: higher rates assume deposit disintermediation and slower mortgage prepayments; lower rates assume movement toward lower-yielding deposits and faster mortgage paydowns. Actual behavior may differ with economic conditions, competition and customer preferences.

Market risk and derivatives

USB uses derivatives for asset/liability management and customer needs, including to manage interest-rate, prepayment, credit, price and foreign-exchange exposures; it says it does not use them speculatively. Customer-related market, funding and liquidity exposures are generally offset with similar positions or other instruments. Counterparty risk is managed through diversification, netting, collateral where available, risk participations and central clearing. Some mortgage-servicing-rights (MSR) derivatives are not designated as accounting hedges. Forward commitments to sell TBAs and residential mortgage loans economically hedge mortgage-production exposures; USB elected fair-value accounting for mortgage loans held for sale (MLHFS).

Covered-position VaR uses historical simulation at the 99th percentile and a one-year look-back; USB expects one-day VaR to be exceeded two to three times annually.

No combined covered-position backtesting losses exceeded VaR in either quarter. USB also uses stress tests and factor sensitivities. For residential MLHFS and hedges, VaR average/high/low was $0M/$1M/$0M in Q3 2026, versus $1M/$1M/$0M in Q3 2025; for MSR and hedges it was $2M/$3M/$1M, versus $3M/$5M/$2M.

Liquidity and funding

Available liquidity declined principally because of lower available securities. Deposits were $531.7B at September 30, 2026, compared with $522.2B at December 31, 2025. Average deposits funded approximately 76% of total assets in Q3 2026, versus 75% in Q3 2025. At quarter-end, long-term debt was $52.0B and short-term borrowings were $21.0B. USB cites its diversified deposit base, marketable assets and secured borrowing facilities as liquidity sources.

Parent-company long-term debt increased to $40.1B from $37.1B, mainly reflecting $5.1B of medium-term note issuances, partly offset by $1.4B of maturities; no parent debt was scheduled to mature in the remainder of 2026. Parent liquidity exceeded required minimums and covered 24 months of expected capital and debt-service needs in normal conditions (assuming wholesale-market access), or 12 months in adverse conditions without subsidiary dividends or wholesale-market access.

USB reported compliance with LCR and Net Stable Funding Ratio requirements at the reported dates.

Capital and shareholder returns

Capital remained above regulatory “well-capitalized” requirements at both reported dates.

U.S. Bancorp shareholders’ equity rose to $66.4B from $65.2B, primarily on corporate earnings, partly offset by dividends and changes in unrealized available-for-sale securities gains and losses in AOCI. Of the $5.0B common-stock repurchase authorization announced in September 2024, approximately $3.911B remained at September 30, 2026. In Q3 2026, USB repurchased 13,277 shares under the program at an average $63.23 per share. Dividends and repurchases remain subject to Board approval and regulatory requirements.

Regulators proposed capital-framework changes in March 2026, including a single risk-based framework and revisions intended to improve risk sensitivity and consistency. USB expects the proposals to be favorable, though their impact remains uncertain pending final rules and an effective date.

European exposure and commitments

Europe-generated revenue was approximately 2% of total net revenue in both Q3 and the first nine months of 2026. At September 30, USB held approximately $6.8B of operating deposits with European banks, predominantly the Central Bank of Ireland and Bank of England; exposure to other banks is limited through diversification and institution-specific limits. USB also has European-linked corporate lending, derivative counterparties and money-market-fund investments in sovereign debt, but did not expect deterioration in European conditions, including effects from the Russia-Ukraine conflict, to have a significant impact.

Contractual commitments and contingent obligations may be on or off balance sheet and include credit commitments, letters of credit, guarantees and support for unconsolidated variable-interest entities.

U.S. Bancorp business-segment review — Q3 2026

Dollars in millions, except average loans and ratios.

Consolidated results

Q3 net revenue increased 8.7% year over year, and attributable net income rose 10.0%. For the first nine months, net revenue increased 7.9% and attributable net income rose 14.5%. The efficiency ratio improved to 55.9% in Q3 from 57.2%, and to 57.0% for 9M from 59.0%. Average consolidated loans grew 8.0%, to $409.548 billion from $379.152 billion.

Segment results

WCCIB: Q3 revenue grew 19.9%, with taxable-equivalent net interest income of $1,971 million versus $1,761 million and noninterest income of $2,026 million versus $1,572 million. Growth reflected higher loan and deposit balances, BTIG-related capital-markets activity, greater syndication and client-derivative activity, and stronger trust and investment-management fees amid business growth and favorable markets. Average loans increased 14.5%, to $216.957 billion from $189.530 billion. Expenses rose to $1,754 million from $1,495 million, mainly due to BTIG-related compensation and technology costs; provision declined to $112 million from $196 million on favorable credit performance. Q3 revenue growth exceeded 9M growth of 16.2%.

Consumer and Business Banking: Revenue was nearly flat, down 0.5%, while net income increased 6.7%. Net interest income rose to $1,878 million from $1,851 million as deposit growth was partly offset by lower loan balances; noninterest income declined to $526 million from $564 million, primarily on lower mortgage gain-on-sale activity. Expenses fell to $1,488 million from $1,562 million, mainly due to lower shared-services expense. Provision increased to $72 million from $62 million, primarily with growth in commercial and other retail loans. Average loans declined 1.4%, to $143.819 billion from $145.906 billion.

Payment Services: Revenue increased 6.5%, but net income fell 31.4%. Net interest income rose to $834 million from $781 million, supported by higher average loans, including the purchased small-business credit-card portfolio. Noninterest income increased to $1,034 million from $973 million, reflecting corporate payments, treasury management, and card revenue on higher sales volume. Expenses increased to $1,040 million from $1,005 million. Provision jumped 45.2%, to $594 million from $409 million, reflecting the initial provision on the acquired portfolio and loan growth, materially pressuring earnings. Average loans rose 11.9%, to $48.058 billion from $42.957 billion. Q3 earnings decline was sharper than the 15.9% decline for 9M.

Treasury and Corporate Support: The Q3 revenue loss widened to $299 million from $173 million, and attributable net loss increased to $204 million from $78 million. Negative net interest income worsened to $193 million from $142 million, reflecting lower earning assets, partly offset by lower funding costs and fixed-asset repricing benefits. Noninterest income was negative $106 million versus negative $31 million, primarily due to investment-security sale losses. Expenses rose to $211 million from $135 million; the provision benefit was $124 million versus $96 million.

Balance sheet and capital

Tangible common equity to tangible assets was 6.6%, versus 6.7% at December 31, 2025; tangible common equity to risk-weighted assets was 9.0%, versus 9.4%. Tangible book value per common share was $29.34, compared with $27.84 at September 30, 2025. Q3 return on tangible common equity was 18.5%, versus 18.6%.

Other developments and controls

The 2026 organizational and methodology changes moved Impact Finance from Treasury and Corporate Support to WCCIB, and debit-card revenue from Payment Services to Consumer and Business Banking; prior periods were recast for comparability. BTIG contributed to WCCIB capital-markets revenue and increased related compensation and technology costs. The small-business card portfolio purchase supported Payment Services growth but drove a substantial initial credit-loss provision. Lower mortgage gain-on-sale activity continued to weigh on Consumer and Business Banking, while investment-security sale losses and lower earning assets affected Treasury and Corporate Support.

Critical accounting policies include the allowance for credit losses, fair-value estimates, mortgage servicing rights, and income taxes, which involve difficult, subjective, or complex estimates. Management concluded disclosure controls and procedures were effective at period-end; no Q3 change materially affected, or was reasonably likely to materially affect, internal control over financial reporting.

U.S. Bancorp — Q3 and nine months ended September 30, 2026

Dollars in billions unless otherwise noted.

Consolidated results

Fully taxable-equivalent net interest income was $4.490 billion in Q3 2026 versus $4.251 billion, and $13.168 billion for 9M versus $12.453 billion. On that basis, total revenue grew 8.7% in Q3 and 7.9% for 9M. Net income attributable to the company rose 10.0% in Q3 and 14.5% for 9M.

Net interest margin improved 9 basis points to 2.84% in Q3 and to 2.80% for 9M. Lower funding costs more than offset lower asset yields: average interest-bearing deposit cost fell to 2.22% in Q3 from 2.43%, while loan yield declined to 5.75% from 5.97%. Q3 average loans grew 8.0% to $409.548 billion; average deposits rose to $526.602 billion from $511.782 billion.

Q3 segment results

Payment Services’ lower earnings reflected higher provision expense: $594 million in Q3 versus $409 million. Its revenue is reported net of rewards, rebates and certain partner payments ($890 million in Q3; $2.6 billion for 9M). Segment results were recast for 2026 reporting changes, including moving Impact Finance and debit-card revenue between segments.

Balance sheet and cash flows

Total equity less goodwill and other intangible assets was $48.346 billion. Loan growth included commercial loans of $158.814 billion (from $146.418 billion), commercial real estate of $53.451 billion (from $48.920 billion), residential mortgages of $116.806 billion (from $115.885 billion), credit-card loans of $41.587 billion (from $38.031 billion), and other retail loans of $44.589 billion (from $42.081 billion).

Credit, securities and valuation risks

Credit indicators improved overall from year-end: nonperforming loans declined to $1.284 billion from $1.547 billion; accruing loans 90+ days past due fell to $743 million from $853 million, and 30–89 days past due to $1.214 billion from $1.308 billion. Criticized loans declined to $7.197 billion from $8.420 billion, although special-mention loans increased to $2.146 billion from $1.885 billion. Q3 net loan charge-offs were $523 million versus $536 million; for 9M they were $1.605 billion versus $1.637 billion. The allowance for credit losses was $8.165 billion at September 30, 2026, versus $7.947 billion at year-end; acquisition-related amounts contributed to the increase.

At September 30, held-to-maturity securities had $72.923 billion amortized cost and $59.380 billion fair value. Available-for-sale securities had $87.881 billion amortized cost before $341 million of negative portfolio-level basis adjustments ($87.540 billion after adjustment) and $80.228 billion fair value. Management attributed unrealized losses primarily to interest rates and market spreads, reported no material AFS credit-loss allowance, and said it did not expect to be forced to sell before cost recovery. Accumulated other comprehensive loss widened to $9.462 billion from $6.987 billion at year-end.

A significant valuation risk was Level 3 derivatives: they were a $901 million net liability at September 30, 2026, versus a $70 million net asset a year earlier, and produced income-statement losses of $1.130 billion in Q3 and $2.881 billion for 9M. Most 9M losses were included in capital-markets revenue. Valuations depend on unobservable assumptions, including mortgage-loan commitment close rates, embedded servicing values, counterparty adjustments and Visa litigation outcomes. Mortgage servicing rights were valued at $3.419 billion, up from $3.159 billion; interest-rate exposure was substantially offset by derivatives.

Funding, strategic developments and contingencies

Customer-related derivative notional rose to $1.724 trillion from $1.354 trillion. At September 30, derivatives subject to collateral arrangements had $3.9 billion fair value in a net-liability position, against $3.4 billion of cash collateral posted. Repurchase-agreement and securities-loaned liabilities increased to $79.880 billion from $58.028 billion, mostly overnight or continuous.

U.S. Bancorp acquired BTIG on June 1, 2026, for approximately $395 million cash and 6.6 million shares, with up to $275 million additional cash consideration tied to performance over three years. Preliminary goodwill was $613 million; the acquisition is intended to expand institutional trading, investment banking, research and brokerage.

Unfunded commitments to extend credit were $481.3 billion. Other contingent exposures include merchant-processing guarantees, standby letters of credit and securities-lending indemnifications; these contractual maximums are not estimates of probable losses. Visa merchant litigation and other legal and regulatory matters remain ongoing, and outcomes could require fines, restitution or business-practice changes.

Signature and shareholder information

U.S. Bancorp’s report was signed November 4, 2026, by Lisa R. Stark, Executive Vice President, Chief Accounting Officer and Controller, acting as Principal Accounting Officer and duly authorized officer. Ernst & Young LLP is the company’s independent auditor. U.S. Bancorp common stock trades on the NYSE under ticker USB.

The company generally pays quarterly common-stock dividends around January 15, April 15, July 15 and October 15, subject to Board approval. Shareholders may elect dividend reinvestment and/or optional cash purchases through Computershare. The section also provides corporate, investor-relations, media and shareholder-services contact information; it reports no financial results or material business developments.