U.S. Bank's new CEO wants to restore investor confidence

UPDATE: This article includes additional information from U.S. Bancorp's earnings call and comments from an interview with company CFO John Stern.

Gunjan Kedia projected confidence on Wednesday that U.S. Bancorp is moving in the right direction, as the company seeks to accelerate its growth and restore investors' optimism.

One day after taking the helm as CEO of the Minneapolis-based parent of U.S. Bank, Kedia told analysts that she has three immediate priorities — well-controlled expense management, organic growth across the organization and the transformation of the company's payments business.

She also reiterated all of the financial targets that the company shared in September during its first investor day in five years, and said that investor confidence was paramount to moving forward.

Kedia was candid about U.S. Bancorp's stock price, which is down about 20% year to date, and was down about 1.9% on Wednesday during midafternoon trading.

In response to a question from an analyst about what she will do differently as the new CEO to achieve better financial results, Kedia admitted she was "not happy" with the stock performance.

Expense discipline "needs to come back," and the bank needs to "build out the organic growth muscle," Kedia said. U.S. Bancorp also needs "a different level of urgency around execution," she added.

"We're very confident that the results will be better going forward," she said.

U.S. Bancorp, which has been criticized for underachievement, is showing signs of progress toward better financial performance. During the first quarter, the $676.5 billion-asset company improved profitability and efficiency ratios compared with the year-ago period and boosted its capital position. It also grew fee income, which makes up 41% of its total net revenue. And it reduced noninterest expenses by 5% year over year on a nonadjusted basis.

The company is sticking with its financial targets for 2026 and 2027, including a return on assets of between 1.15% and 1.35% and a return on tangible common equity in the mid-teens. For the first quarter, return on assets came in at 1.04%, while the return on tangible common equity was 17.5%.

The company's efficiency ratio was 60.8%, higher than the low-50s target shared in September.

Against an uncertain macro-economic backdrop driven by tariffs, U.S. Bancorp is also standing by its full-year 2025 guidance. Net revenue is still expected to grow between 3% to 5%, and the firm continues to forecast positive operating leverage for the full year, it said Wednesday.

U.S. Bancorp's confidence in its outlook reflects revenue-related tailwinds, including fixed-rate asset repricing, the potential for lower interest rates and higher fee income, John Stern, the company's chief financial officer, told American Banker in a post-earnings call interview.

While an economic slowdown could change those expectations, U.S. Bancorp isn't predicting any extreme outcomes at this point, Stern said.

"Banks have had cycles where revenue has been challenged, and that certainly is a possibility," he said. "But that's not our base case. Our base case is a resilient economy, and we move forward. It may not be a straight line, but [it's one in which] we move forward."

Stern was quick to say that the company has been focused for the past decade on making investments.

"We have spent a lot of money … getting our systems up to date, building infrastructure such as our top-rated app and all of the capabilities we need to do money movement and just getting ready for the digital age," Stern said. "We've done a lot of that work, and now feel we can utilize those products and grow the company with urgency" while watching costs.

"The combination of those things and the execution of it will provide investors with confidence in our shares," he added.

For the quarter, U.S. Bancorp reported net income of $1.7 billion, up from $1.3 billion in the same quarter of 2024. Earnings per share of $1.03 topped analysts' estimates by 5 cents.

Net interest income of $4.1 billion was up 2.7% compared with the year-ago quarter. Fee income totaled $2.8 billion, an increase of 5% year over year.

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The first-quarter results follow the recent death of Terry Dolan, U.S. Bancorp's vice chair and chief administration officer, who was killed in a plane crash near Minneapolis on March 29.

Dolan owned the small plane that flew into a home in Brooklyn Park, a suburb 11 miles northwest of Minneapolis. He was the pilot and only passenger aboard.

During the call, Kedia told analysts that the company "truly appreciated the outpouring of support we have received from the investment community." Several analysts who worked closely with Dolan when he was the bank's CFO expressed their condolences.

The company has not said who is filling Dolan's day-to-day responsibilities.

Kedia succeeded Andy Cecere, who is now executive chairman of the board. Kedia, who was named company president in May, retains that title after moving into the CEO role.