2Q‘26 Earnings: Solid Qtr with Earnings Tailwinds Converging; Reiterate Buy

Research evidence excerpt

2Q‘26 Earnings: Solid Qtr with Earnings Tailwinds Converging; Reiterate Buy

U.S. Bancorp (USB)

Equity Research

July 16, 2026

of increasing capital markets revenue from roughly 7% of total company revenue today toward 10%

through expanded client penetration and cross-sell opportunities. Additional fee tailwinds into 2H26

include the Amazon small business card portfolio conversion, which is expected to contribute one-

third of its $75M-85M quarterly revenue opportunity through fee income once fully onboarded. Overall,

management's tone around fee growth was among the most constructive areas of the call and

reinforces fee diversification as an increasingly important component of USB's earnings profile.

Expenses increased $163M sequentially (+15% LQA) to $4.43B in 2Q, coming in above our estimate.

Excluding $84M of expense associated with BTIG, core expense growth was 1.9% Q/Q and 3.9% Y/

Y, reflecting continued investments in technology, AI, marketing, and revenue-producing initiatives,

alongside higher incentive compensation tied to stronger business performance. Management

emphasized that expense growth should be viewed in the context of accelerating revenue growth,

highlighting that USB generated 400 bps of positive operating leverage during the quarter while

continuing to invest aggressively in areas intended to support long-term growth. Technology and

communications expense increased 12.5% Y/Y, while marketing expense rose 34.2% Y/Y, reflecting

ongoing investment behind key strategic initiatives, including Smartly, payments, and broader

franchise growth. Management raised its FY26 positive operating leverage outlook to 300+ bps

excluding BTIG (roughly 200 bps including BTIG), noting that the difference is largely attributable to