Key financial results
- Earnings and revenue: U.S. Bancorp reported record net revenue of approximately $8 billion and diluted earnings per share of $1.34 in the third quarter of 2026.
We delivered another strong quarter, highlighted by record net revenue of approximately $8 billion and diluted earnings per share of $1.34
- EPS growth: Diluted earnings per share increased approximately 10% year-over-year, or 16% excluding a reserve build of approximately $0.07 per share.
Results in the quarter reflect strong execution against our 3 strategic priorities. Net revenue grew 8.7% year-over-year
- Fee revenue: Total fee income grew 14.9% year-over-year and contributed 44% of total revenue.
Total fee income increased 14.9% year-over-year, with broad-based strength across most fee categories.
- Expenses: Noninterest expense increased 7.1% year-over-year, or 2.0% excluding BTIG.
Noninterest expense increased 7.1% versus the prior year reflecting BTIG and continued investment in growth initiatives
- Capital: The common equity Tier 1 capital ratio was 10.8% at quarter end, stable compared with the previous quarter.
As of September 30, our common equity Tier 1 capital ratio was 10.8%, stable compared to the prior quarter.
Business segment results
- Capital markets: The BTIG acquisition contributed $226 million of fee revenue in the third quarter.
We closed the BTIG acquisition in June, and it contributed $226 million of fee revenue in the third quarter.
- Capital markets: Capital markets revenue grew 69% year-over-year, reflecting the full quarter contribution from BTIG and approximately 10% growth in legacy capital markets.
Capital Markets growth of 69% year-over-year reflects a full quarter contribution from BTIG and approximately 10% growth across legacy capital markets.
- Small business: The Amazon small business credit card portfolio contributed approximately $900 million to average loans and $1.7 billion to period-end loans.
The Amazon small business credit card portfolio contributed approximately $900 million and $1.7 billion to the third quarter average and period end loans, respectively.
- Corporate payments: Corporate payments revenue grew approximately 19% year-over-year, driven by new business and higher corporate and government spending.
Obviously, on the corporate payment side, we saw about 19% year-on-year growth.
- Treasury management: Treasury management revenue continued to grow in the mid-single digits.
And then the treasury management side is continuing to see nice growth in that mid-single-digit area.
Capital allocation
- Capital ratios: The common equity Tier 1 capital ratio was 10.8% at September 30, or 9.1% when adjusted for AOCI.
- Capital changes: Strong earnings generation added approximately 30 basis points to the adjusted CET1 ratio, which was offset by $12 billion of risk-weighted asset growth and the impact of higher interest rates and wider credit spreads.
As it pertains to the adjusted CET1 ratio, strong earnings generation, net of dividends, added approximately 30 basis points of capital.
- Share repurchases: Management expects capital ratios to build, positioning the company to resume share repurchases over the next one or two quarters.
We expect our capital ratios to build from here, positioning us to resume share repurchases over the next quarter or 2.
- Payout ratio: The company remains committed to a 70% to 75% capital distribution payout ratio.
In the meantime, we obviously are very much committed to the 70% to 75% payout from a capital distribution standpoint.
Industry trends and dynamics
- Payment rails: Corporate payments and treasury management are experiencing a convergence of treasury management rails, card rails, and stablecoins.
- Stablecoin pilot: Management launched the first USB DC stablecoin pilot during the quarter to test interoperability.
Earlier this quarter, we launched our first USB DC stable corn pilot.
- Client demand: Client demand for stablecoin products remains minimal, with current interactions driven primarily by curiosity and experimentation.
What there is now is client curiosity even from 2 quarters back, we have quite a few clients wanting to experiment with us on what this might do.
Competitive landscape
- Brand investments: U.S. Bancorp is expanding its small business and consumer reach through targeted brand investments, including partnerships with the NFL and brand ambassadors.
We are supporting this ground game with targeted brand investments including through our NFL partnership and new brand ambassadors
- Small business reach: The company serves more than 2 million small businesses through an interconnected platform combining banking, payments, and cash management.
We serve more than 2 million small businesses through a scaled interconnected platform that contributes meaningfully to company revenue
- Pricing environment: Management noted that deposit and loan pricing competition remains stable and manageable following recent Federal Reserve rate hikes.
The answer is going to be pretty boring. We're not seeing a whole lot of change in both deposit and the loan side of the equation from a pricing standpoint.
Macroeconomic environment
- Consumer health: Consumer spending levels remain high and employment is strong, with no material credit deterioration observed.
Spend levels are high, employment is strong. So there just continues to be strong patterns there despite sentiment and things of that variety.
- Commercial health: Commercial clients maintain strong balance sheets and are well managed, though commercial real estate is monitored closely in a higher rate environment.
And then on the commercial side, and commercial clients are well managed. They have strong balance sheets.
- Interest rates: Significant increases in treasury rates and widening credit spreads during the third quarter negatively impacted capital ratios.
Additionally, the significant increase in treasury rates and widening credit spreads during the third quarter impacted the ratio by an additional 40 basis points.
Growth opportunities and strategies
- Capital markets strategy: Management expects capital markets to grow from 8% to 10% or more of total company revenue over the next three to five years.
We expect capital markets to grow from 8% to 10% or more of total company revenue over the next 3 to 5 years by focusing on 3 strategies.
- Branch expansion: The branch strategy includes increasing annual branch investments from approximately $200 million to $300 million to densify presence within the existing footprint.
We have shared that our branch investment has increased from $200 million or thereabouts on average to $300 million, which is what we expect to do going forward.
- Small business priority: Small business banking is a key growth priority for 2027, supported by the Amazon co-brand partnership and new banking teams.
Financial guidance and outlook
- Fourth quarter NII guidance: For the fourth quarter, management expects year-over-year net interest income growth of 6% to 7% on a fully taxable equivalent basis.
For the fourth quarter, on a year-over-year basis, we expect net interest income growth of 6% to 7% on a fully taxable equivalent basis.
- Fourth quarter fee guidance: Fourth quarter total fee revenue growth is expected to be in the range of 13% to 14%, with roughly half coming from BTIG.
Total fee revenue growth in the range of 13% to 14% with roughly half of the growth coming from BTIG
- Fourth quarter expense guidance: Fourth quarter noninterest expense growth is expected to be approximately 8%, or closer to 4% excluding BTIG.
noninterest expense growth of approximately 8% or closer to 4%, excluding BTIG.
- Full year revenue guidance: For the full year 2026, total net revenue growth is now expected to be 8% to 9%, or 6% to 7% excluding BTIG, improving from prior guidance of 5% to 7%.
- Full year operating leverage: Full year positive operating leverage is expected to be approximately 300 basis points, or approximately 400 basis points excluding BTIG.
We now expect to deliver approximately 300 basis points of positive operating leverage for the full year or approximately 400 basis points, excluding the impact from BTIG.
- Net interest margin outlook: The net interest margin is expected to increase by a similar amount in the fourth quarter as the third quarter expansion of 5 basis points.
We currently expect net interest margin to increase by a similar amount in the fourth quarter.
Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Net revenue | approximately $8 billion | up 8.7% year-over-year |
| Diluted earnings per share | $1.34 | up approximately 10% from a year ago |
| Net interest margin | 2.84% | expanded 5 basis points sequentially |
| CET1 ratio | 10.8% | stable compared to the prior quarter |
| Tangible book value per share | up 5.4% year-over-year | up 5.4% year-over-year |
How management sounded
Balanced (+35 on our -100 to +100 scale). Management expressed high confidence in strong revenue momentum, positive operating leverage, and capital build despite macroeconomic shifts. Management sounded more upbeat than on 20% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Loan demand and pipeline trends in commercial and industrial lending.
- Interest rate movements and their impact on AOCI and capital ratios.
- Regulatory updates regarding Basel III endgame and capital requirements.
Earlier calls
- Q2 2026 (Jul 16, 2026), tone Balanced: U.S. Bancorp reported record net revenue of $7.7 billion and earnings per share of $1.35, driven by strong fee growth and accelerated loan activity.
