U.S. Bancorp USB reported a positive surprise of 1.3% in the first quarter of 2016. The company reported earnings per share of 76 cents, beating the Zacks Consensus Estimate by a penny. Results were in line with the prior-year quarter earnings.Organic growth was driven by higher revenues along with elevated average loans and deposits. Steady capital deployment activities reflected a strong capital position. However, increase in expenses and provisions were a major drag.U.S. Bancorp (USB) EPS BNRI & Surprise Percent - Last 5 Quarters | FindTheCompany Performance in DetailU.S. Bancorp’s net revenue came in at around $5.04 billion in the quarter, up 2.7% year over year. The increase in net interest income was partially offset by lower non-interest income. However, revenues lagged the Zacks Consensus Estimate of $5.07 billion.U.S. Bancorp’s tax-equivalent net interest income stood at $2.9 billion in the quarter, up 4.9% from the prior-year quarter. The rise was mainly due to loan growth and higher rates. These positives were partially offset by a continued shift in the loan portfolio mix.Average earning assets climbed 4.8% year over year, driven by growth in average total loans and average investment securities. Yet, net interest margin of 3.06% was down 2 basis points year over year and mainly reflected higher rates, partially offset by change in the loan portfolio mix, lower rates on new securities along with reduced reinvestment rates on maturing securities.U.S. Bancorp’s non-interest income inched down slightly on a year-over-year basis to $2.1 billion. The decline was mainly due to decreased mortgage banking revenues and investment product fees. These negatives were mostly offset by elevated credit and debit card revenues, trust and investment management fees and merchant processing services revenues.Provision for credit losses increased 25% year over year to $330 million in the reported quarter.U.S. Bancorp’s average total loans increased 5.8% year over year to $262.3 billion. The growth stemmed from a rise in commercial loans, residential mortgages and credit card loans. These increases were partially offset by a drop in retail leasing, total commercial real estate and covered loans. Excluding covered loans, average total loans rose 5.8% year over year.Average total deposits were up 6.3% from the prior-year quarter to $295.9 billion. The rise was due to growth in non-interest-bearing deposits, savings deposits as well as interest-bearing deposits.Non-interest expenses rose 3.2% year over year to $2.7 billion at U.S. Bancorp. Elevated compensation, professional services, marketing and business development and technology and communications expenses played spoilsport. These were partially offset by lower employee benefits and other non-interest expenses.Credit QualityCredit metrics at U.S. Bancorp was a mixed bag in the reported quarter. Net charge-offs stood at $315 million, up 12.9% year over year. On a year-over-year basis, the company experienced deterioration in net charge-offs in the commercial segment.Total allowance for credit losses was $4.3 billion, down 2.3% year over year. U.S. Bancorp’s non-performing assets (excluding covered assets) were $1.7 billion, up 1.4% year over year.Capital PositionDuring the quarter under review, U.S. Bancorp maintained a solid capital position. Effective Jan 1, 2014, the regulatory capital requirements for the company comply with Basel III, subject to certain transition provisions from Basel I over the next four years to full implementation by Jan 1, 2018. The transitional common equity tier 1 capital ratio was 9.5% as of Mar 31, 2016, compared with 9.6% as of Mar 31, 2015, under the standardized approach.The tier 1 capital ratio was 11.1%, in line with the prior-year quarter. Common equity tier 1 capital to risk-weighted assets ratio under the Basel III standardized approach fully implemented was 9.2% as of Mar 31, 2016, in line with the prior-year quarter.All regulatory ratios of U.S. Bancorp continued to be in excess of “well-capitalized” requirements. Moreover, based on the Basel III fully implemented advanced approach, the Tier 1 common equity to risk-weighted assets ratio was estimated at 11.9% as of Mar 31, 2016, compared with 11.8% as of Mar 31, 2015. The common equity tier 1 capital to risk-weighted assets ratio under the Basel III advanced approach fully implemented was 11.9% as of Mar 31, 2016, as compared with 11.8% as of Mar 31, 2015.The tangible common equity to tangible assets ratio was 7.7% as of Mar 31, 2016 compared with 7.6% as of Mar 31, 2015.U.S. Bancorp posted an improvement in book value per share, which increased to $23.82 as of Mar 31, 2016, from $22.20 recorded at the end of the prior-year quarter.Capital Deployment UpdateReflecting the company’s capital strength during the first quarter, U.S. Bancorp returned 80% of earnings to shareholders through common stock dividends and buybacks. It was at the high end of the company’s long-term goal of returning 60%–80% to shareholders.ConclusionU.S. Bancorp posted an encouraging quarter. Along with higher revenues, a solid capital position and increased lending activities are added advantages. The company follows a conservative growth stratagem and has made small but strategic acquisitions.However, the top-line headwinds are expected to persist, thanks to sluggish economic recovery. Moreover, there are concerns related to the impact of legal issues and its global exposure. Further, rising expenses and provisions remains a headwind. The shares of U.S. Bancorp currently carry a Zacks Rank #3 (Hold).Performance of Other Major BanksBanking major – JPMorgan Chase & Co. JPM – which kicked started the first-quarter 2016 earnings season, reported earnings of $1.35 per share surpassing the Zacks Consensus Estimate of $1.26, which was pretty conservative given the number of downward revisions over the last couple of months. However, the figure reflects a 7% decline from the year-ago quarter, indicating the impact of challenging market conditions.Buoyed by strong top-line growth, Wells Fargo & Company’s WFC first-quarter 2016 earnings recorded a positive surprise of about 1%. Earnings of 99 cents per share beat the Zacks Consensus Estimate by a penny. However, it compared unfavorably with the prior-year quarter’s earnings of $1.04 per share.A fall in operating expenses drove Citigroup Inc. C to deliver a positive earnings surprise of more than 6% in first-quarter 2016. The company’s earnings from continuing operations per share of $1.11 for the quarter outpaced the Zacks Consensus Estimate of $1.04. However, earnings declined 26% on a year-over-year basis. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JPMORGAN CHASE (JPM): Free Stock Analysis Report US BANCORP (USB): Free Stock Analysis Report WELLS FARGO-NEW (WFC): Free Stock Analysis Report CITIGROUP INC (C): Free Stock Analysis Report To read this article on Zacks.com click here.