U.S. Bancorp earnings increased in the third quarter of 2026 as record revenue outweighed higher expenses and credit-loss provisions. Following the October 15 results, DA Davidson reaffirmed its Buy rating and $73 price target on October 18. The bank also indicated plans to resume share repurchases within the next one to two quarters, a prospective capital return rather than a completed buyback.
Key Takeaways
- DA Davidson maintained its Buy rating and $73 price target after the third-quarter results.
- Quarterly earnings per share rose 9.8% year over year, although they slipped from the second quarter.
- A potential buyback restart remains a plan, while the bank's CET1 capital ratio held steady sequentially.
Table of Contents
- U.S. Bancorp earnings rise on record revenue
- Higher costs temper the revenue gains
- Buyback plans remain separate from the analyst target
- Conclusion
U.S. Bancorp earnings rise on record revenue
The bank's third-quarter 2026 earnings release showed net income attributable to U.S. Bancorp of $2.202 billion, up 10% from a year earlier. Diluted earnings per share reached $1.34, compared with $1.22 a year earlier and $1.35 in the second quarter.
Total net revenue on a taxable-equivalent basis reached $7.970 billion, up 8.7% year over year. Net interest income on the same basis increased 5.6%, supported by loan growth, a small-business credit card portfolio purchase and fixed-asset repricing.
Noninterest income rose 13.1%, with higher capital markets revenue, trust and investment management fees, and corporate payment and treasury management revenue. Chief Executive Gunjan Kedia said a full quarter of BTIG results helped capital markets revenue increase 69.3%.
The distinction between annual and sequential performance matters: earnings per share improved substantially from 2025 but were slightly lower than in the immediately preceding quarter.
| Item | Details |
|---|---|
| Net interest margin | 2.84% in Q3 2026, versus 2.75% a year earlier. |
| Efficiency ratio | 55.9%, compared with 57.2% in Q3 2025. |
| Return on average assets | 1.25%, up from 1.17% a year earlier. |
| Average loans | $409.548 billion, up 8.0% year over year. |
| Average deposits | $526.602 billion, up 2.9% year over year. |
| Dividends declared per common share | $0.54 for Q3 2026, versus $0.52 a year earlier. |
Higher costs temper the revenue gains
Noninterest expense increased 7.1% year over year, reflecting BTIG, higher compensation and benefits, technology spending, and marketing and business development costs. The bank nevertheless reported positive operating leverage of 240 basis points, indicating that revenue growth outpaced expense growth on its reported measure.
Credit indicators were mixed. The net charge-off ratio declined to 0.51% from 0.56% a year earlier and 0.53% in the second quarter. However, the provision for credit losses rose 14.5% year over year to $654 million.
U.S. Bancorp attributed the higher provision to the small-business credit card portfolio purchase, partly offset by an improved economic outlook and favorable credit performance. The lower charge-off rate therefore did not translate into a lower provision expense.
Buyback plans remain separate from the analyst target
DA Davidson's $73 target is the firm's valuation view, not company guidance or a guaranteed future share price. Its reaffirmed Buy rating followed a quarter of stronger annual revenue and profitability.
U.S. Bancorp indicated that repurchases could resume within the next one to two quarters as capital levels improve. Its Common Equity Tier 1 capital ratio stood at 10.8% on September 30, unchanged from the second quarter and below 10.9% a year earlier. The prospective restart should not be treated as evidence that shares have already been repurchased.
Conclusion
The quarter combined stronger annual earnings with higher expenses and provisions. The next quarterly results will provide a check on whether revenue continues to outgrow costs and whether the planned repurchase restart has moved into execution.
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