US Bancorp (USB.N): 3Q26 Review - Strong Quarter With Our Outlook Unchanged, but More Confidence in the Trajectory

Citi reviews US Bancorp's 3Q26 results: USB outperformed on earnings day (up ~2.01% vs BKX up ~1.27%) on a strong quarter, with core PPNR beating consensus by 5c and 3Q NIM of 2.84% (up 5bps q/q) above the 2.81% consensus, with another ~5bps of sequential NIM expansion expected into the 4Q exit. We raise 2026E EPS by 5c to $5.30 (vs. FactSet consensus of $5.27), keep 2027E EPS unchanged at $6.00 (vs. $5.84 consensus) and 2028E EPS unchanged at $6.65. We tweak our price target down to $70 (from $72) after updating risk-free rates/ERP in our cost-of-equity framework, and maintain our Buy rating, implying an expected total return of 25.7%. Continued fee momentum and expense control support better full-year operating leverage, and we come away with greater confidence in management's 3.0% NIM target (projecting 2H27); overall a strong quarter with the fundamental story on track.