8-K
US BANCORP \DE\ Depositary Shares (each representing 1/100th interest in a share of Series A Non-Cumulative Perpetual Preferred Stock, par value $1.00) Depositary Shares (each representing 1/1,000th interest in a share of Series B Non-Cumulative Perpetual Preferred Stock, par value $1.00) Depositary Shares (each representing 1/1,000th interest in a share of Series F Non-Cumulative Perpetual Preferred Stock, par value $1.00) Depositary Shares (each representing 1/1,000th interest in a share of Series K Non-Cumulative Perpetual Preferred Stock, par value $1.00) false 0000036104 0000036104 2021-07-15 2021-07-15 0000036104 us-gaap:CommonStockMember 2021-07-15 2021-07-15 0000036104 us-gaap:SeriesAPreferredStockMember 2021-07-15 2021-07-15 0000036104 us-gaap:SeriesBPreferredStockMember 2021-07-15 2021-07-15 0000036104 us-gaap:SeriesFPreferredStockMember 2021-07-15 2021-07-15 0000036104 usb:SeriesKPreferredStockMember 2021-07-15 2021-07-15 0000036104 us-gaap:MediumTermNotesMember 2021-07-15 2021-07-15 0000036104 usb:SeriesLPreferredStockMember 2021-07-15 2021-07-15 0000036104 usb:SeriesMPreferredStockMember 2021-07-15 2021-07-15

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 15, 2021

U.S. BANCORP

(Exact name of registrant as specified in its charter)

1-6880 

(Commission File Number)

 

Delaware   41-0255900
(State or other jurisdiction   (I.R.S. Employer Identification
of incorporation)   Number)

 

800 Nicollet Mall
Minneapolis, Minnesota 55402
(Address of principal executive offices and zip code)

(651) 466-3000 

(Registrant’s telephone number, including area code)

(not applicable)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 Under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
symbol

 

Name of each exchange
on which registered

Common Stock, $.01 par value per share   USB   New York Stock Exchange
Depositary Shares (each representing 1/100th interest in a share of Series A Non-Cumulative Perpetual Preferred Stock, par value $1.00)   USB PrA   New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series B Non-Cumulative Perpetual Preferred Stock, par value $1.00)   USB PrH   New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series F Non-Cumulative Perpetual Preferred Stock, par value $1.00)   USB PrM   New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series K Non-Cumulative Perpetual Preferred Stock, par value $1.00)   USB PrP   New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series L Non-Cumulative Perpetual Preferred Stock, par value $1.00)   USB PrQ   New York Stock Exchange
Depositary Shares (each representing 1/1,000th interest in a share of Series M Non-Cumulative Perpetual Preferred Stock, par value $1.00)   USB PrR   New York Stock Exchange
0.850% Medium-Term Notes, Series X (Senior), due June 7, 2024   USB/24B   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule l2b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section l3(a) of the Exchange Act.  ☐

 

 

 


ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 15, 2021, U.S. Bancorp (the “Company”) issued a press release reporting quarter-ended June 30, 2021 results, and posted on its website its 2Q21 Earnings Conference Call Presentation, which contains certain additional historical and forward-looking information relating to the Company. The press release is included as Exhibit 99.1 hereto and is incorporated herein by reference. The information included in the press release is considered to be “filed” under the Securities Exchange Act of 1934. The 2Q21 Earnings Conference Call Presentation is included as Exhibit 99.2 hereto and is incorporated herein by reference. The information included in the 2Q21 Earnings Conference Call Presentation is considered to be “furnished” under the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference in any filings under the Securities Act of 1933. The press release and 2Q21 Earnings Conference Call Presentation contain forward-looking statements regarding the Company and each includes a cautionary statement identifying important factors that could cause actual results to differ materially from those anticipated.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

 

  99.1

Press Release issued by U.S. Bancorp on July 15, 2021, deemed “filed” under the Securities Exchange Act of 1934.  

 

  99.2

2Q21 Earnings Conference Call Presentation, deemed “furnished” under the Securities Exchange Act of 1934.  

 

   104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

U.S. BANCORP
By /s/    Lisa R. Stark
Lisa R. Stark
Executive Vice President and
Controller

DATE: July 15, 2021

EX-99.1

Exhibit 99.1

 

    

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U.S. Bancorp Reports Second Quarter 2021 Results

 

 Net income of $2.0 billion and net revenue of $5.8 billion

 Return on average assets of 1.44% and return on average common equity of 16.3%

 Common Equity Tier 1 capital ratio of 9.9% and strong levels of liquidity

 

 

    2Q21 Key Financial Data

 

 

2Q21 Highlights

                                   

 PROFITABILITY METRICS

    2Q21        1Q21        2Q20     

 

 

 

 

 

 

 

 

     

 

 

  Net income of $1,982 million and diluted earnings per common share of $1.28

 

  Return on average assets of 1.44% and return on average common equity of 16.3%

 

  Net revenue of $5,783 million, including $3,164 million of net interest income and $2,619 million of noninterest income

 

  Returned 79% of 2Q earnings to shareholders through dividends and share buybacks

 

  Average total earning assets growth of 1.3% year-over-year

 

  Average total deposits growth of 6.4% year-over-year

 

  Net charge-off ratio of 0.25% in 2Q21 compared with 0.31% in 1Q21 and 0.55% in 2Q20

 

  Allowance for credit losses declined $350 million during the quarter given improving economic outlook and credit trends

 

  Nonperforming assets decreased 11.9% on a linked quarter basis and 9.7% year-over year

 

  CET1 capital ratio increased to 9.9% at June 30, 2021, compared with 9.0% at June 30, 2020

 

 Return on average assets (%)

    1.44        1.69        .51   

 Return on average common equity (%)

    16.3        19.0        5.3   

 Return on tangible common

 equity (%) (a)

    20.9        24.3        7.1   

 Net interest margin (%)

    2.53        2.50        2.62   

 Efficiency ratio (%) (a)

    59.0        62.1        57.6   

 INCOME STATEMENT (b)

    2Q21        1Q21        2Q20   

 Net interest income (taxable-equivalent basis)

    $3,164        $3,089        $3,224   

 Noninterest income

    $2,619        $2,381        $2,614   

 Net income attributable to U.S. Bancorp

    $1,982        $2,280        $689   

 Diluted earnings per common share

    $1.28        $1.45        $.41   

 Dividends declared per common share

    $.42        $.42        $.42   

 BALANCE SHEET (b)

    2Q21        1Q20        2Q20   

 Average total loans

    $294,284        $293,989        $318,107   

 Average total deposits

    $429,210        $426,364        $403,303   

 Net charge-off ratio

    .25%        .31%        .55%   

 Book value per common share (period end)

    $31.74        $30.53        $30.46   

 Basel III standardized CET1 (c)

    9.9%        9.9%        9.0%   

 

   

 

(a) See Non-GAAP Financial Measures reconciliation on page 16

 

 

 

(b) Dollars in millions, except per share data

 

 

 

(c) CET1 = Common equity tier 1 capital ratio

 

 

 

CEO Commentary

 

“Our second quarter results were indicative of steadily improving economic conditions and continued execution of our strategic growth plan across our business lines and markets. As of late June, total sales volumes for each of our three payments businesses exceeded 2019 levels for the first time since the beginning of the pandemic. For a second consecutive quarter, credit quality was better than expected as our net charge-off ratio set another record low. Our capital and liquidity positions remain strong and following the results of the Federal Reserve’s stress test in late June we announced that we will recommend that our Board of Directors approve a 9.5% increase in our common dividend payable in the third quarter. As we head into the second half of 2021, we are well positioned to benefit from improving economic conditions; however, we are even more excited about the significant secular growth opportunities we see driving industry leading returns over the longer term. I want to thank our employees for their continued dedication to help our clients, communities, and shareholders.”

— Andy Cecere, Chairman, President and CEO, U.S. Bancorp                    

 

In the Spotlight

 

2021 Annual Stress Test

The Company’s results for the 2021 stress test reflected a strong financial profile and well-established financial discipline which allowed the Company to maintain strong capital and liquidity positions throughout the recent adverse economic conditions. Based on the stress test results, the Company will be subject to a stress capital buffer of 2.5 percent for the period beginning October 1, 2021 and ending on September 30, 2022. As a result, the Company will recommend that its Board of Directors approve a 9.5 percent increase to its third quarter dividend payable in October 2021.

Focus on Diversity, Equity and Inclusion

U.S. Bank has again been named to DiversityInc’s list of Top 50 Companies for Diversity. The company ranked No. 18 (up from No. 40 last year) on the overall Top 50 List, tying for the largest jump on the list in 2021. The assessment collects data across six key areas: Leadership Accountability, Human Capital Diversity Metrics, Talent Programs, Workforce Practices, Supplier Diversity, and Philanthropy.

U.S. Bank Access Commitment

U.S. Bank recently established the U.S. Bank Access Fund, a $25 million fund supporting more than 30,000 women of color microbusiness owners over three years, prioritizing Black women business owners. The fund will help sustain and create new job opportunities, provide access to capital, technical assistance and networking opportunities. U.S. Bank leaders will also share expertise with business owners through seminars and roundtables.

U.S. Bank to Acquire the Asset Management Division of PFM

U.S. Bank has entered into a definitive agreement to purchase PFM Asset Management LLC, which is expected to close in the fourth quarter of 2021. Based on March 31, 2021 balances, this transaction will nearly double U.S. Bancorp Asset Management’s market share to more than $325 billion assets under management and administration, increasing U.S. Bank’s presence nationally and solidifying our position as a leading provider of investment solutions.

 

 

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        Investor contact: Jennifer Thompson, 612.303.0778 | Media contact: Jeff Shelman, 612.422.1423


LOGO

   U.S. Bancorp Second Quarter 2021 Results
      

 

  INCOME STATEMENT HIGHLIGHTS  

  ($ in millions, except per-share data)

                        Percent Change                       
      2Q
2021
     1Q
2021
     2Q
2020
     2Q21 vs
1Q21
     2Q21 vs 
2Q20 
     YTD
2021
     YTD
2020
     Percent
Change
 

Net interest income

     $3,137        $3,063        $3,200        2.4        (2.0)        $6,200        $6,423        (3.5

Taxable-equivalent adjustment

     27        26        24        3.8        12.5         53        48        10.4  

Net interest income (taxable-equivalent basis)

     3,164        3,089        3,224        2.4        (1.9)        6,253        6,471        (3.4

Noninterest income

     2,619        2,381        2,614        10.0        .2        5,000        5,139        (2.7

Total net revenue

     5,783        5,470        5,838        5.7        (.9)        11,253        11,610        (3.1

Noninterest expense

     3,387        3,379        3,318        .2        2.1         6,766        6,634        2.0  

Income before provision and income taxes

     2,396        2,091        2,520        14.6        (4.9)        4,487        4,976        (9.8

Provision for credit losses

     (170      (827      1,737        79.4        nm         (997      2,730        nm  

Income before taxes

     2,566        2,918        783        (12.1      nm         5,484        2,246        nm  

Income taxes and taxable-equivalent adjustment

     578        633        88        (8.7      nm         1,211        372        nm  

Net income

     1,988        2,285        695        (13.0      nm         4,273        1,874        nm  

Net (income) loss attributable to noncontrolling interests

     (6      (5      (6      (20.0      --          (11      (14      21.4  

Net income attributable to U.S. Bancorp

     $1,982        $2,280        $689        (13.1      nm         $4,262        $1,860        nm  

Net income applicable to U.S. Bancorp common shareholders

     $1,914        $2,175        $614        (12.0      nm         $4,089        $1,702        nm  

Diluted earnings per common share

     $1.28        $1.45        $.41        (11.7      nm         $2.73        $1.12        nm  
                                                                         

Net income attributable to U.S. Bancorp was $1,982 million for the second quarter of 2021, which was $1,293 million higher than the $689 million for the second quarter of 2020, and $298 million lower than the $2,280 million for the first quarter of 2021. Diluted earnings per common share were $1.28 in the second quarter of 2021, compared with $0.41 in the second quarter of 2020 and $1.45 in the first quarter of 2021.

The increase in net income year-over-year was primarily due to lower provision for credit losses driven by a reserve release as a result of improvement in the global economy combined with government stimulus programs compared with a reserve build during 2020. Net interest income decreased 1.9 percent on a year-over-year taxable-equivalent basis, primarily due to the impact of lower rates compared with a year ago and declining average loan balances, partially offset by the benefit of deposit and funding mix as well as higher loan fees related to the Small Business Administration (“SBA”) Paycheck Protection Program. The net interest margin declined from a year ago to 2.53 percent in the second quarter of 2021 primarily due to the mix of earning assets and higher premium amortization within the investment portfolio, partially offset by the net benefit of funding composition and higher loan fees. Noninterest income increased 0.2 percent compared with a year ago driven by improvements in payment services revenue, deposit service charges, and other noninterest income, mostly offset by lower commercial products revenue, mortgage banking revenue, and securities gains. Noninterest expense increased 2.1 percent reflecting increases in personnel expense, primarily related to performance-based incentive compensation and employee benefits expense driven by substantially improving financial results, as well as higher marketing and business development expense and technology and communications expense, partially offset by lower net occupancy and equipment expense and other noninterest expense.

Net income decreased on a linked quarter basis primarily due to higher provision for credit losses as a result of a larger reserve release in the first quarter of 2021, partially offset by 5.7 percent growth in total revenue including increasing net interest income and stronger noninterest income. Net interest income on a taxable-equivalent basis increased 2.4 percent primarily due to higher yields and volumes in the investment portfolio, favorable earning asset mix, higher loan fees, one more day in the quarter, and favorable deposit and funding mix, partially offset by lower loan yields. The net interest margin increased on a linked quarter basis primarily reflecting changes in the investment portfolio mix, favorable funding and deposit mix, and higher loan fees, partially offset by lower loan yields. Noninterest income increased 10.0 percent compared with the first quarter of 2021 driven by increases in payment services revenue, mortgage banking revenue, securities gains, and other noninterest income. Noninterest expense was relatively flat on a linked quarter basis reflecting costs of investments in marketing and business development expense offset by lower personnel expense.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

 NET INTEREST INCOME  
 (Taxable-equivalent basis; $ in millions)                         Change                       
     

2Q

2021

    

1Q

2021

    

2Q

2020

    

2Q21 vs

1Q21

     2Q21 vs
2Q20
    

YTD

2021

    

YTD

2020

     Change  

Components of net interest income

                       

Income on earning assets

     $3,409         $3,367         $3,697         $42         $(288)         $6,776         $7,839         $(1,063)   

Expense on interest-bearing liabilities

     245         278         473         (33)         (228)         523         1,368         (845)   

Net interest income

     $3,164         $3,089         $3,224         $75         $(60)         $6,253         $6,471         $(218)   

Average yields and rates paid

                       

Earning assets yield

     2.73%         2.73%         3.00%         --%         (.27)%         2.73%         3.34%         (.61)%   

Rate paid on interest-bearing liabilities

     .28            .31            .50            (.03)            (.22)            .29            .75            (.46)      

Gross interest margin

     2.45%         2.42%         2.50%         .03%         (.05)%         2.44%         2.59%         (.15)%   

Net interest margin

     2.53%         2.50%         2.62%         .03%         (.09)%         2.52%         2.76%         (.24)%   

Average balances

                       

Investment securities (a)

     $160,615         $145,520         $120,867         $15,095         $39,748         $153,109         $120,856         $32,253   

Loans

     294,284         293,989         318,107         295         (23,823)         294,138         307,882         (13,744)   

Earning assets

     500,751         497,711         494,119         3,040         6,632         499,239         470,921         28,318   

Interest-bearing liabilities

     356,565         360,582         380,320         (4,017)         (23,755)         358,562         366,540         (7,978)   
(a) Excludes unrealized gain (loss)                        

 

 

 

Net interest income on a taxable-equivalent basis in the second quarter of 2021 was $3,164 million, a decrease of $60 million (1.9 percent) compared with the second quarter of 2020. The decrease was primarily due to the impact of lower rates compared with a year ago and lower loan volumes, partially offset by the benefit of deposit and funding mix as well as higher loan fees. Average earning assets were $6.6 billion (1.3 percent) higher than the second quarter of 2020, reflecting an increase of $39.7 billion (32.9 percent) in average investment securities, while average total loans decreased $23.8 billion (7.5 percent) due to continued paydowns by corporate customers that accessed the capital markets last year and average other earning assets decreased $10.8 billion (22.1 percent) primarily driven by lower cash balances as the Company continues to purchase mortgage-backed, U.S. Treasury and state and political securities.

Net interest income on a taxable-equivalent basis increased $75 million (2.4 percent) on a linked quarter basis primarily due to higher yields and volumes in the investment portfolio, favorable earning asset mix, higher loan fees, one more day in the quarter, and favorable deposit and funding mix, partially offset by lower loan yields. Average earning assets were $3.0 billion (0.6 percent) higher on a linked quarter basis, reflecting increases of $15.1 billion (10.4 percent) in average investment securities and a slight increase in average loans, partially offset by a decrease of $10.1 billion (21.1 percent) in average other earning assets driven by lower cash balances as the Company deployed liquidity to purchase mortgage-backed, U.S. Treasury and state and political securities.

The net interest margin in the second quarter of 2021 was 2.53 percent, compared with 2.62 percent in the second quarter of 2020 and 2.50 percent in the first quarter of 2021. The decrease in the net interest margin from the prior year was primarily due to the mix of earning assets and higher premium amortization within the investment portfolio, partially offset by the net benefit of funding composition and higher loan fees. The increase in the net interest margin on a linked quarter basis reflected changes in the investment portfolio mix, favorable funding and deposit mix, and higher loan fees, partially offset by lower loan yields.

The increase in average investment securities on a year-over-year and linked quarter basis was due to purchases of mortgage-backed, U.S. Treasury and state and political securities, net of prepayments and maturities.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

AVERAGE LOANS  
($ in millions)                         Percent Change                      
     

2Q

2021

    

1Q

2021

    

2Q

2020

    

2Q21 vs

1Q21

   

2Q21 vs

2Q20

   

YTD

2021

    

YTD

2020

    

Percent

Change

 

Commercial

     $97,713         $96,757         $122,442         1.0       (20.2)       $97,237         $111,385         (12.7)  

Lease financing

     5,261         5,334         5,597         (1.4     (6.0     5,298         5,628         (5.9)  

Total commercial

     102,974         102,091         128,039         .9       (19.6     102,535         117,013         (12.4)  

Commercial mortgages

     27,721         27,968         30,194         (.9     (8.2     27,844         29,858         (6.7)  

Construction and development

     10,843         10,818         10,894         .2       (.5     10,831         10,725         1.0  

Total commercial real estate

     38,564         38,786         41,088         (.6     (6.1     38,675         40,583         (4.7)  

Residential mortgages

     73,351         75,201         71,122         (2.5     3.1       74,271         71,007         4.6  

Credit card

     21,116         21,144         21,510         (.1     (1.8     21,130         22,673         (6.8)  

Retail leasing

     7,873         7,975         8,412         (1.3     (6.4     7,924         8,443         (6.1)  

Home equity and second mortgages

     11,368         12,062         14,386         (5.8     (21.0     11,713         14,612         (19.8)  

Other

     39,038         36,730         33,550         6.3       16.4       37,890         33,551        12.9  

Total other retail

     58,279         56,767         56,348         2.7       3.4       57,527         56,606         1.6  

Total loans

     $294,284         $293,989         $318,107         .1       (7.5     $294,138         $307,882         (4.5)  

 

 

 

Average total loans for the second quarter of 2021 were $23.8 billion (7.5 percent) lower than the second quarter of 2020. The decrease was primarily due to lower total commercial loans (19.6 percent) driven by continued paydowns by corporate customers that accessed the capital markets last year, lower home equity and second mortgages (21.0 percent) as more customers chose to refinance their existing first lien residential mortgage balances during the prior year due to the low interest rate environment, and lower total commercial real estate (6.1 percent) as a result of paydowns. These decreases were partially offset by growth in residential mortgages (3.1 percent) driven by loan repurchases from the Government National Mortgage Association (“GNMA”), as well as growth in other retail loans (16.4 percent) driven by growth in installment loans due to the impact of COVID-19 on recreational vehicle sales.

Average total loans were $295 million (0.1 percent) higher than the first quarter of 2021 primarily driven by higher total commercial loans (0.9 percent) and higher other retail loans (6.3 percent) driven by growth in installment loans, partially offset by lower residential mortgages (2.5 percent) as a result of customer paydowns.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

 AVERAGE DEPOSITS                                                
 ($ in millions)                         Percent Change                        
     2Q       1Q       2Q       2Q21 vs     2Q21 vs     YTD       YTD       Percent  
      2021       2021       2020       1Q21     2Q20     2021       2020       Change  

Noninterest-bearing deposits

   $ 125,297       $ 118,352       $ 95,106         5.9       31.7     $ 121,844       $ 84,624         44.0  

Interest-bearing savings deposits

                     

Interest checking

     103,356         97,385         83,789         6.1       23.4       100,387         80,573         24.6  

Money market savings

     113,673         124,825         129,692         (8.9     (12.4     119,218         125,819         (5.2

Savings accounts

     62,102         58,848         51,237         5.5       21.2       60,484         49,643         21.8  

Total savings deposits

     279,131         281,058         264,718         (.7     5.4       280,089         256,035         9.4  

Time deposits

     24,782         26,954         43,479         (8.1     (43.0     25,862         42,394         (39.0

Total interest-bearing deposits

     303,913         308,012         308,197         (1.3     (1.4     305,951        298,429         2.5  

Total deposits

   $ 429,210       $ 426,364       $ 403,303         .7       6.4     $ 427,795       $ 383,053         11.7  

 

 

Average total deposits for the second quarter of 2021 were $25.9 billion (6.4 percent) higher than the second quarter of 2020, including approximately $7 billion related to the acquisition of deposit balances from State Farm Bank in the fourth quarter of 2020. Average noninterest-bearing deposits increased $30.2 billion (31.7 percent) across all business lines. Average total savings deposits were $14.4 billion (5.4 percent) higher year-over-year driven by Consumer and Business Banking. Average time deposits were $18.7 billion (43.0 percent) lower than the prior year quarter primarily within Corporate and Commercial Banking. Changes in time deposits are largely related to those deposits managed as an alternative to other funding sources, based largely on relative pricing and liquidity characteristics.

Average total deposits increased $2.8 billion (0.7 percent) from the first quarter of 2021. On a linked quarter basis, average noninterest-bearing deposits increased $6.9 billion (5.9 percent) driven by Corporate and Commercial Banking, Wealth Management and Investment Services and Consumer and Business Banking. Average total savings deposits decreased $1.9 billion (0.7 percent) compared with the first quarter of 2021 primarily due to decreases in Wealth Management and Investment Services, partially offset by increases in Consumer and Business Banking. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, decreased $2.2 billion (8.1 percent) on a linked quarter basis across all business lines.

The growth in average noninterest-bearing deposits and total average savings deposits year-over-year was primarily a result of the actions by the federal government to increase liquidity in the financial system and government stimulus programs.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

NONINTEREST INCOME                                                  
($ in millions)                         Percent Change                         
     2Q      1Q      2Q      2Q21 vs      2Q21 vs      YTD      YTD      Percent  
      2021      2021      2020      1Q21      2Q20      2021      2020      Change  

Credit and debit card revenue

     $396         $336         $284         17.9        39.4        $732         $588         24.5  

Corporate payment products revenue

     138         126         101         9.5        36.6        264         246         7.3  

Merchant processing services

     374         318         266         17.6        40.6        692         603         14.8  

Trust and investment management fees

     446         444         434         .5        2.8        890         861         3.4  

Deposit service charges

     176         161         133         9.3        32.3        337         342         (1.5

Treasury management fees

     160         147         137         8.8        16.8        307         280         9.6  

Commercial products revenue

     280         280         355         --         (21.1      560         601         (6.8

Mortgage banking revenue

     346         299         648         15.7        (46.6      645         1,043         (38.2

Investment products fees

     60         55         45         9.1        33.3        115         94         22.3  

Securities gains (losses), net

     43         25         81         72.0        (46.9      68         131         (48.1

Other

     200         190         130         5.3        53.8        390         350         11.4  

Total noninterest income

     $2,619         $2,381         $2,614         10.0        .2        $5,000         $5,139         (2.7

 

 

Second quarter noninterest income of $2,619 million was $5 million (0.2 percent) higher than the second quarter of 2020. During 2020, payment services revenue had been adversely affected by the impact of the pandemic on consumer and business spending, particularly related to travel and entertainment activities. However, spending has continued to strengthen across most sectors driven by government stimulus, local jurisdictions reducing restrictions and consumer behaviors normalizing. As a result, payments services revenue increased $257 million (39.5 percent) compared with the second quarter of 2020. The components of payments revenue included strong growth in credit and debit card revenue of $112 million (39.4 percent) driven by higher net interchange revenue related to sales volume and prepaid card processing activities related to government stimulus programs as well as stronger transaction and cash advance fees, higher corporate payment products revenue of $37 million (36.6 percent) reflecting improving business spending, and higher merchant processing services revenue of $108 million (40.6 percent) driven by higher sales volume. Deposit service charges increased $43 million (32.3 percent) primarily due to customer activity and ATM processing revenue. Other noninterest income increased $70 million (53.8 percent) primarily due to higher retail leasing end of term residual gains and related fees and higher tax-advantaged investment syndication revenue. Mostly offsetting favorable impacts on noninterest income, mortgage banking revenue decreased $302 million (46.6 percent) driven by lower production volume and related gain on sale margins, partially offset by the favorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities. Commercial products revenue decreased $75 million (21.1 percent) primarily due to lower capital markets activity and trading revenue, partially offset by higher non-yield loan fees as a result of higher unused commitments.

Noninterest income was $238 million (10.0 percent) higher in the second quarter of 2021 compared with the first quarter of 2021. Payment services revenue increased $128 million (16.4 percent) compared with the first quarter of 2021 as the global economy continues to recover from the impacts of the COVID-19 pandemic. Credit and debit card revenue increased $60 million (17.9 percent), corporate payment products revenue increased $12 million (9.5 percent) and merchant processing services increased $56 million (17.6 percent) all primarily driven by higher sales volume. Mortgage banking revenue increased $47 million (15.7 percent) due to the favorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities, partially offset by lower production volume and related gain on sale margins.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

 NONINTEREST EXPENSE                                                              
 ($ in millions)                         Percent Change                      
     

2Q

2021

    

1Q

2021

    

2Q

2020

    

2Q21 vs

1Q21

   

2Q21 vs

2Q20

   

YTD

2021

    

YTD

2020

    

Percent

Change

 

Compensation

   $ 1,798       $ 1,803       $ 1,685         (.3     6.7     $ 3,601       $ 3,305         9.0  

Employee benefits

     337         384         314         (12.2     7.3       721         666         8.3  

Net occupancy and equipment

     258         263         271         (1.9     (4.8     521         547         (4.8

Professional services

     108         98         106         10.2       1.9       206         205         .5  

Marketing and business development

     90         48         67         87.5       34.3       138         141         (2.1

Technology and communications

     362         359         309         .8       17.2       721         598         20.6  

Postage, printing and supplies

     65         69         72         (5.8     (9.7     134         144         (6.9

Other intangibles

     40         38         43         5.3       (7.0     78         85         (8.2

Other

     329         317         451         3.8       (27.1     646         943         (31.5

Total noninterest expense

   $ 3,387       $ 3,379       $ 3,318         .2       2.1     $ 6,766       $ 6,634         2.0  
                                                                       

Second quarter noninterest expense of $3,387 million was $69 million (2.1 percent) higher than the second quarter of 2020 reflecting increases in compensation expense, employee benefits expense, marketing and business development expense, and technology and communications expense, partially offset by lower net occupancy and equipment expense and other noninterest expense. Compensation expense increased $113 million (6.7 percent) compared with the second quarter of 2020 due to performance-based incentives, merit, and revenue-related compensation driven by business production. Employee benefits expense increased $23 million (7.3 percent) primarily due to payroll taxes and related benefits, higher medical claims expense, and higher pension expense. Marketing and business development expense increased $23 million (34.3 percent) due to the timing of marketing campaigns supporting business development. Technology and communications expense increased $53 million (17.2 percent) primarily due to higher call center volume related to prepaid cards and capital expenditures supporting business technology investments. These increases were partially offset by lower net occupancy and equipment expense of $13 million (4.8 percent) primarily due to branch optimization initiatives and lower other noninterest expense of $122 million (27.1 percent) primarily due to higher COVID-19 related accruals in the second quarter of 2020 including recognizing liabilities related to future delivery exposures for merchant and airline processing as well as lower costs related to tax-advantaged projects and lower FDIC insurance expense in the current year quarter.

Noninterest expense increased $8 million (0.2 percent) on a linked quarter basis primarily driven by an increase of $42 million (87.5 percent) in marketing and business development expense primarily due to the timing of marketing campaigns supporting business development. Mostly offsetting unfavorable impacts on noninterest expense, compensation expense decreased $5 million (0.3 percent) driven by the impact of seasonally higher stock-based compensation in the first quarter partially offset by the impact of seasonal merit increases, one additional day in the second quarter, performance-based incentives, and higher variable compensation. Employee benefits decreased $47 million (12.2 percent) driven by higher payroll taxes in the first quarter.

Provision for Income Taxes

The provision for income taxes for the second quarter of 2021 resulted in a tax rate of 22.5 percent on a taxable-equivalent basis (effective tax rate of 21.7 percent), compared with 11.2 percent on a taxable-equivalent basis (effective tax rate of 8.4 percent) in the second quarter of 2020, and a tax rate of 21.7 percent on a taxable-equivalent basis (effective tax rate of 21.0 percent) in the first quarter of 2021. The increase in the tax rate year-over-year was due to the marginal impact of providing taxes on higher pretax earnings in the second quarter of 2021.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

 ALLOWANCE FOR CREDIT LOSSES  
 ($ in millions)  

2Q

2021

    % (a)    

1Q

2021

    % (a)    

4Q

2020

    % (a)    

3Q

2020

    % (a)    

2Q

2020

    % (a)  

Balance, beginning of period

  $ 6,960       $ 8,010       $ 8,010       $ 7,890       $ 6,590    

Net charge-offs

                   

Commercial

    26       .11       52       .22       142       .56       167       .60       105       .34  

Lease financing

    1       .08       4       .30       8       .57       11       .78       6       .43  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total commercial

    27       .11       56       .22       150       .56       178       .61       111       .35  

Commercial mortgages

    --        --        (12     (.17     82       1.12       85       1.13       19       .25  

Construction and development

    --        --        5       .19       2       .07       (2     (.07     3       .11  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total commercial real estate

    --        --        (7     (.07     84       .83       83       .81       22       .22  

Residential mortgages

    (10     (.05     (5     (.03     (7     (.04     (3     (.02     (3     (.02

Credit card

    148       2.81       144       2.76       165       2.99       201       3.63       229       4.28  

Retail leasing

    (1     (.05     1       .05       9       .43       20       .94       33       1.58  

Home equity and second mortgages

    (3     (.11     (2     (.07     (3     (.09     (2     (.06     --        --   

Other

    19       .20       36       .40       43       .48       38       .43       45       .54  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total other retail

    15       .10       35       .25       49       .34       56       .39       78       .56  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total net charge-offs

    180       .25       223       .31       441       .58       515       .66       437       .55  

Provision for credit losses

    (170       (827       441         635         1,737    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Balance, end of period

  $ 6,610       $ 6,960       $ 8,010       $ 8,010       $ 7,890    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Components

                   

Allowance for loan losses

  $ 6,026       $ 6,343       $ 7,314       $ 7,407       $ 7,383    

Liability for unfunded credit commitments

    584         617         696         603         507    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total allowance for credit losses

  $ 6,610       $ 6,960       $ 8,010       $ 8,010       $ 7,890    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Gross charge-offs

  $ 314       $ 374       $ 556       $ 611       $ 522    

Gross recoveries

  $ 134       $ 151       $ 115       $ 96       $ 85    

Allowance for credit losses as a percentage of Period-end loans

    2.23         2.36         2.69         2.61         2.54    

Nonperforming loans

    649         617         654         678         737    

Nonperforming assets

    624         579         617         631         673    

(a)  Annualized and calculated on average loan balances

   

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

The Company’s provision for credit losses for the second quarter of 2021 was a benefit of $170 million, which was $657 million higher than the prior quarter and $1,907 million lower than the second quarter of 2020. During the first half of 2021, factors affecting economic conditions, including passing of additional government stimulus, widespread vaccine availability in the U.S. and reduced levels of new virus cases, have contributed to an economic recovery. However, rising inflationary concerns and the impact of pandemic stress continue to weigh on select portfolios. In addition to these factors, expected loss estimates considered various factors including customer specific information impacting changes in risk ratings, projected delinquencies and potential effects of diminishing liquidity without support of mortgage forbearance and direct federal stimulus. Currently, consumer credit trends continue to perform better than expected, while select commercial portfolios continue to be monitored for structural shifts associated with the pandemic.

Total net charge-offs in the second quarter of 2021 were $180 million, compared with $223 million in the first quarter of 2021, and $437 million in the second quarter of 2020. The net charge-off ratio was 0.25 percent in the second quarter of 2021, compared with 0.31 percent in the first quarter of 2021 and 0.55 percent in the second quarter of 2020. Net charge-offs decreased $43 million (19.3 percent) compared with the first quarter of 2021 mainly due to lower total commercial and total other retail net charge-offs. Charge-off rates benefitted from improving economic conditions, borrower liquidity and strong asset prices in the market that support repayment and recovery on problem loans. Net charge-offs decreased $257 million (58.8 percent) compared with the second quarter of 2020 reflecting improvement across most loan categories with the largest drivers being total commercial, credit card and total other retail net charge-offs.

The allowance for credit losses was $6,610 million at June 30, 2021, compared with $6,960 million at March 31, 2021, and $7,890 million at June 30, 2020. The decrease on a linked quarter basis was driven by improvement in the global economy and strong portfolio performance compared with the reserve build during 2020 driven by the concerns associated with the economic impact of COVID-19. The ratio of the allowance for credit losses to period-end loans was 2.23 percent at June 30, 2021, compared with 2.36 percent at March 31, 2021, and 2.54 percent at June 30, 2020. The ratio of the allowance for credit losses to nonperforming loans was 649 percent at June 30, 2021, compared with 617 percent at March 31, 2021, and 737 percent at June 30, 2020.

Nonperforming assets were $1,059 million at June 30, 2021, compared with $1,202 million at March 31, 2021, and $1,173 million at June 30, 2020. The ratio of nonperforming assets to loans and other real estate was 0.36 percent at June 30, 2021, compared with 0.41 percent at March 31, 2021, and 0.38 percent at June 30, 2020. The year-over-year decrease in nonperforming assets was primarily due to a decrease in total commercial nonperforming loans, partially offset by an increase in total commercial real estate nonperforming loans. The decrease in nonperforming assets on a linked quarter basis was driven by decreases in the commercial and commercial real estate portfolios. Accruing loans 90 days or more past due were $376 million at June 30, 2021, compared with $476 million at March 31, 2021, and $556 million at June 30, 2020. The Company expects credit quality to return to more normalized levels over time as the economy rebounds and consumer spending resumes. However, some manageable levels of elevated nonperforming assets in certain industries and loan categories impacted by the pandemic may experience longer recovery periods.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

 DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES                  
 (Percent)   

Jun 30

2021

    

Mar 31

2021

    

Dec 31

2020

    

Sep 30

2020

    

Jun 30

2020

 

Delinquent loan ratios - 90 days or more past due excluding nonperforming loans

 

     

Commercial

     .04        .06        .05        .06        .07  

Commercial real estate

     .01        .01        .01        --          --    

Residential mortgages

     .16        .19        .18        .15        .16  

Credit card

     .70        .95        .88        .91        1.22  

Other retail

     .10        .12        .15        .14        .16  

Total loans

     .13        .16        .16        .15        .18  

Delinquent loan ratios - 90 days or more past due including nonperforming loans

 

     

Commercial

     .32        .39        .42        .48        .45  

Commercial real estate

     .81        .94        1.15        .82        .48  

Residential mortgages

     .49        .54        .50        .46        .50  

Credit card

     .70        .95        .88        .91        1.22  

Other retail

     .39        .42        .42        .40        .48  

Total loans

     .47        .54        .57        .53        .52  
                                              

 

ASSET QUALITY (a)  
($ in millions)                                   
     

Jun 30

2021

    

Mar 31

2021

    

Dec 31

2020

    

Sep 30

2020

    

Jun 30

2020

 

Nonperforming loans

              

Commercial

     $247         $298         $321         $403         $403   

Lease financing

     44         49         54         56         53   

Total commercial

     291         347         375         459         456   

Commercial mortgages

     224         266         411         323         188   

Construction and development

     88         90         39                 

Total commercial real estate

     312         356         450         330         195   

Residential mortgages

     244         253         245         240         242   

Credit card

     --         --         --         --         --   

Other retail

     171         172         154         152         178   

Total nonperforming loans

     1,018         1,128         1,224         1,181         1,071   

Other real estate

     17         19         24         35         52   

Other nonperforming assets

     24         55         50         54         50   

Total nonperforming assets

     $1,059         $1,202         $1,298         $1,270         $1,173   

Accruing loans 90 days or more past due

     $376         $476         $477         $461         $556   

Nonperforming assets to loans plus ORE (%)

     .36         .41         .44         .41         .38   

(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due

 

 

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

COMMON SHARES  
(Millions)    2Q
2021
     1Q
2021
     4Q
2020
     3Q
2020
     2Q
2020
 

Beginning shares outstanding

     1,497         1,507         1,506         1,506         1,506   

Shares issued for stock incentive plans, acquisitions and other corporate purposes

                          --         --   

Shares repurchased

     (15      (13      --         --         --   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ending shares outstanding

     1,483         1,497         1,507         1,506         1,506   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
                                              

 

CAPITAL POSITION                                    
($ in millions)    Jun 30     Mar 31     Dec 31     Sep 30     Jun 30  
      2021     2021     2020     2020     2020  

Total U.S. Bancorp shareholders’ equity

   $ 53,039      $ 51,678      $ 53,095      $ 52,565      $ 51,850   

Basel III Standardized Approach (a)

          

Common equity tier 1 capital

   $ 39,691      $ 39,103      $ 38,045      $ 37,485      $ 36,351   

Tier 1 capital

     46,103        45,517        44,474        43,916        42,781   

Total risk-based capital

     53,625        53,625        52,602        52,086        51,457   

Common equity tier 1 capital ratio

     9.9      9.9      9.7      9.4      9.0 

Tier 1 capital ratio

     11.5        11.5        11.3        11.0        10.6   

Total risk-based capital ratio

     13.4        13.5        13.4        13.1        12.8   

Leverage ratio

     8.5        8.4        8.3        8.3        8.0   

Tangible common equity to tangible assets (b)

     6.8        6.6        6.9        7.0        6.7   

Tangible common equity to risk-weighted assets (b)

     9.3        9.1        9.5        9.3        9.0   

Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)

     9.5        9.5        9.3        9.0        8.7   

(a) Amounts and ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology

 

(b) See Non-GAAP Financial Measures reconciliation on page 16

          

 

 

Total U.S. Bancorp shareholders’ equity was $53.0 billion at June 30, 2021, compared with $51.7 billion at March 31, 2021, and $51.9 billion at June 30, 2020. The Federal Reserve has announced that the capital restrictions instituted in the third quarter of 2020 in response to the economic uncertainty from the pandemic will expire on June 30, 2021. Based on the results of the 2021 Annual Stress Test, the Company will recommend that its Board of Directors approve a 9.5 percent increase to its third quarter dividend payable in October 2021. The Company’s existing share repurchase program announced in December 2020 which authorizes the repurchase of up to $3.0 billion of its common stock beginning January 1, 2021, remains in effect.

All regulatory ratios continue to be in excess of “well-capitalized” requirements. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III standardized approach was 9.9 percent at June 30, 2021, and at March 31, 2021, compared with 9.0 percent at June 30, 2020. The Company’s common equity tier 1 capital to risk-weighted assets ratio, reflecting the full implementation of the current expected credit losses methodology was 9.5 percent at June 30, 2021, and at March 31, 2021, compared with 8.7 percent at June 30, 2020.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

  Investor Conference Call

On Thursday, July 15, 2021, at 8 a.m. CT, Chairman, President and Chief Executive Officer Andy Cecere and Vice Chair and Chief Financial Officer Terry Dolan will host a conference call to review the financial results. The conference call will be available online or by telephone. To access the webcast and presentation, visit U.S. Bancorp’s website at usbank.com and click on “About Us,” “Investor Relations” and “Webcasts & Presentations.” To access the conference call from locations within the United States and Canada, please dial 866.316.1409. Participants calling from outside the United States and Canada, please dial 706.634.9086. The conference ID number for all participants is 8286744. For those unable to participate during the live call, a recording will be available at approximately 11 a.m. CT on Thursday, July 15 and will be accessible until Thursday, July 22 at 10:59 p.m. CT. To access the recorded message within the United States and Canada, please dial 855.859.2056. If calling from outside the United States and Canada, please dial 404.537.3406 to access the recording. The conference ID is 8286744.

 

 

  About U.S. Bancorp

U.S. Bancorp, with nearly 70,000 employees and $559 billion in assets as of June 30, 2021, is the parent company of U.S. Bank National Association. The Minneapolis-based company serves millions of customers locally, nationally and globally through a diversified mix of businesses: Consumer and Business Banking; Payment Services; Corporate & Commercial Banking; and Wealth Management and Investment Services. The company has been recognized for its approach to digital innovation, social responsibility, and customer service, including being named one of the 2021 World’s Most Ethical Companies and Fortune’s most admired superregional bank. Learn more at usbank.com/about.

 

 

  Forward-looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. The COVID-19 pandemic is adversely affecting U.S. Bancorp, its customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities, reduce the availability of funding to certain financial institutions, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by changes in interest rates; further increases in unemployment rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; civil unrest; changes in customer behavior and preferences; breaches in data security, including as a result of work-from-home arrangements; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk.

For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2020, on file with the Securities and Exchange Commission, including the sections entitled “Corporate Risk Profile” and “Risk Factors” contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. In addition, factors other than these risks also could adversely affect U.S. Bancorp’s results, and the reader should not consider these risks to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

 

 

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   U.S. Bancorp Second Quarter 2021 Results
      

 

  Non-GAAP Financial Measures

 

In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:

 

   

Tangible common equity to tangible assets

 
   

Tangible common equity to risk-weighted assets

 
   

Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology, and

 
   

Return on tangible common equity.

 

These capital measures are viewed by management as useful additional methods of evaluating the Company’s utilization of its capital held and the level of capital available to withstand unexpected negative market or economic conditions. Additionally, presentation of these measures allows investors, analysts and banking regulators to assess the Company’s capital position relative to other financial services companies. These capital measures are not defined in generally accepted accounting principles (“GAAP”), or are not currently effective or defined in banking regulations. In addition, certain of these measures differ from currently effective capital ratios defined by banking regulations principally in that the currently effective ratios, which are subject to certain transitional provisions, temporarily exclude the impact of the 2020 adoption of accounting guidance related to impairment of financial instruments based on the current expected credit losses methodology. As a result, these capital measures disclosed by the Company may be considered non-GAAP financial measures. Management believes this information helps investors assess trends in the Company’s capital adequacy.

The Company also discloses net interest income and related ratios and analysis on a taxable-equivalent basis, which may also be considered non-GAAP financial measures. The Company believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis.

There may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider the consolidated financial statements and other financial information contained in this press release in their entirety, and not to rely on any single financial measure. A table follows that shows the Company’s calculation of these non-GAAP financial measures.

 

 

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CONSOLIDATED STATEMENT OF INCOME  
(Dollars and Shares in Millions, Except Per Share Data)   

    Three Months Ended    

June 30,

   

    Six Months Ended    

June 30,

 
(Unaudited)    2021     2020     2021     2020  

Interest Income

        

Loans

     $2,677       $2,949       $5,401       $6,260  

Loans held for sale

     55       52       122       96  

Investment securities

     618       630       1,135       1,322  

Other interest income

     32       41       65       110  

Total interest income

     3,382       3,672       6,723       7,788  

Interest Expense

        

Deposits

     82       194       167       719  

Short-term borrowings

     18       34       34       105  

Long-term debt

     145       244       322       541  

Total interest expense

     245       472       523       1,365  

Net interest income

     3,137       3,200       6,200       6,423  

Provision for credit losses

     (170     1,737       (997     2,730  

Net interest income after provision for credit losses

     3,307       1,463       7,197       3,693  

Noninterest Income

        

Credit and debit card revenue

     396       284       732       588  

Corporate payment products revenue

     138       101       264       246  

Merchant processing services

     374       266       692       603  

Trust and investment management fees

     446       434       890       861  

Deposit service charges

     176       133       337       342  

Treasury management fees

     160       137       307       280  

Commercial products revenue

     280       355       560       601  

Mortgage banking revenue

     346       648       645       1,043  

Investment products fees

     60       45       115       94  

Securities gains (losses), net

     43       81       68       131  

Other

     200       130       390       350  

Total noninterest income

     2,619       2,614       5,000       5,139  

Noninterest Expense

        

Compensation

     1,798       1,685       3,601       3,305  

Employee benefits

     337       314       721       666  

Net occupancy and equipment

     258       271       521       547  

Professional services

     108       106       206       205  

Marketing and business development

     90       67       138       141  

Technology and communications

     362       309       721       598  

Postage, printing and supplies

     65       72       134       144  

Other intangibles

     40       43       78       85  

Other

     329       451       646       943  

Total noninterest expense

     3,387       3,318       6,766       6,634  

Income before income taxes

     2,539       759       5,431       2,198  

Applicable income taxes

     551       64       1,158       324  

Net income

     1,988       695       4,273       1,874  

Net (income) loss attributable to noncontrolling interests

     (6     (6     (11     (14

Net income attributable to U.S. Bancorp

     $1,982       $689       $4,262       $1,860  

Net income applicable to U.S. Bancorp common shareholders

     $1,914       $614       $4,089       $1,702  

Earnings per common share

     $1.29       $.41       $2.73       $1.13  

Diluted earnings per common share

     $1.28       $.41       $2.73       $1.12  

Dividends declared per common share

     $.42       $.42       $.84       $.84  

Average common shares outstanding

     1,489       1,506       1,495       1,512  

Average diluted common shares outstanding

     1,490       1,507       1,497       1,513  

 

 

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 CONSOLIDATED ENDING BALANCE SHEET

 

 
(Dollars in Millions)    June 30,
2021
    December 31,
2020
    June 30,
2020
 

Assets

     (Unaudited       (Unaudited

Cash and due from banks

     $44,573       $62,580       $52,392  

Available-for-sale investment securities

     160,288       136,840       128,120  

Loans held for sale

     5,856       8,761       8,178  

Loans

      

Commercial

     103,521       102,871       120,261  

Commercial real estate

     38,770       39,311       41,076  

Residential mortgages

     73,366       76,155       71,329  

Credit card

     21,816       22,346       21,257  

Other retail

     59,439       57,024       56,412  

Total loans

     296,912       297,707       310,335  

Less allowance for loan losses

     (6,026     (7,314     (7,383

Net loans

     290,886       290,393       302,952  

Premises and equipment

     3,295       3,468       3,616  

Goodwill

     9,911       9,918       9,842  

Other intangible assets

     3,363       2,864       2,518  

Other assets

     40,714       39,081       39,034  

Total assets

     $558,886       $553,905       $546,652  

Liabilities and Shareholders’ Equity

      

Deposits

      

Noninterest-bearing

     135,143       $118,089       $109,723  

Interest-bearing

     302,039       311,681       303,583  

Total deposits

     437,182       429,770       413,306  

Short-term borrowings

     13,413       11,766       20,595  

Long-term debt

     36,360       41,297       42,579  

Other liabilities

     18,257       17,347       17,692  

Total liabilities

     505,212       500,180       494,172  

Shareholders’ equity

      

Preferred stock

     5,968       5,983       5,984  

Common stock

     21       21       21  

Capital surplus

     8,518       8,511       8,483  

Retained earnings

     67,039       64,188       62,526  

Less treasury stock

     (27,305     (25,930     (25,962

Accumulated other comprehensive income (loss)

     (1,202     322       798  

Total U.S. Bancorp shareholders’ equity

     53,039       53,095       51,850  

Noncontrolling interests

     635       630       630  

Total equity

     53,674       53,725       52,480  

Total liabilities and equity

     $558,886       $553,905       $546,652  

 

 

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 NON-GAAP FINANCIAL MEASURES

 

(Dollars in Millions, Unaudited)    June 30,
2021
    March 31,
2021
    December 31,
2020
    September 30,
2020
    June 30,
2020
 

Total equity

     $53,674       $52,308       $53,725       $53,195       $52,480  

Preferred stock

     (5,968     (5,968     (5,983     (5,984     (5,984

Noncontrolling interests

     (635     (630     (630     (630     (630

Goodwill (net of deferred tax liability) (1)

     (8,987     (8,992     (9,014     (8,992     (8,954

Intangible assets, other than mortgage servicing rights

     (650     (675     (654     (676     (678

Tangible common equity (a)

     37,434       36,043       37,444       36,913       36,234  

Common equity tier 1 capital, determined in accordance with transitional regulatory capital requirements related to the current expected credit losses methodology implementation

     39,691       39,103       38,045       37,485       36,351  

Adjustments (2)

     (1,732     (1,732     (1,733     (1,733     (1,702

Common equity tier 1 capital, reflecting the full implementation of the current expected credit losses methodology (b)

     37,959       37,371       36,312       35,752       34,649  

Total assets

     558,886       553,375       553,905       540,455       546,652  

Goodwill (net of deferred tax liability) (1)

     (8,987     (8,992     (9,014     (8,992     (8,954

Intangible assets, other than mortgage servicing rights

     (650     (675     (654     (676     (678

Tangible assets (c)

     549,249       543,708       544,237       530,787       537,020  

Risk-weighted assets, determined in accordance with prescribed regulatory capital requirements effective for the Company (d)

     401,301*       396,351       393,648       397,657       401,832  

Adjustments (3)

     (1,027)*     (1,440     (1,471     (1,449     (1,394

Risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (e)

     400,274*       394,911       392,177       396,208       400,438  

Ratios*

          

Tangible common equity to tangible assets (a)/(c)

     6.8       6.6       6.9       7.0       6.7  

Tangible common equity to risk-weighted assets (a)/(d)

     9.3       9.1       9.5       9.3       9.0  

Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)/(e)

     9.5       9.5       9.3       9.0       8.7  
          
     Three Months Ended  
     June 30,
2021
    March 31,
2021
    December 31,
2020
    September 30,
2020
    June 30,
2020
 

Net income applicable to U.S. Bancorp common shareholders

     $1,914       $2,175       $1,425       $1,494       $614  

Intangibles amortization (net-of-tax)

     32       30       37       35       34  

Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization

     1,946       2,205       1,462       1,529       648  

Annualized net income applicable to U.S. Bancorp common shareholders, excluding intangible amortization (f)

     7,805       8,943       5,816       6,083       2,606  

Average total equity

     53,593       53,359       53,801       53,046       52,871  

Average preferred stock

     (5,968     (6,213     (6,217     (5,984     (5,984

Average noncontrolling interests

     (631     (630     (630     (630     (630

Average goodwill (net of deferred tax liability) (1)

     (9,003     (9,010     (9,003     (8,975     (8,960

Average intangible assets, other than mortgage servicing rights

     (662     (649     (673     (711     (706

Average tangible common equity (g)

     37,329       36,857       37,278       36,746       36,591  

Return on tangible common equity (f)/(g)

     20.9       24.3       15.6       16.6       7.1  

Net interest income

     $3,137       $3,063       $3,175       $3,227       $3,200  

Taxable-equivalent adjustment (4)

     27       26       26       25       24  

Net interest income, on a taxable-equivalent basis

     3,164       3,089       3,201       3,252       3,224  

Net interest income, on a taxable-equivalent basis (as calculated above)

     3,164       3,089       3,201       3,252       3,224  

Noninterest income

     2,619       2,381       2,550       2,712       2,614  

Less: Securities gains (losses), net

     43       25       34       12       81  

Total net revenue, excluding net securities gains (losses) (h)

     5,740       5,445       5,717       5,952       5,757  

Noninterest expense (i)

     3,387       3,379       3,364       3,371       3,318  

Efficiency ratio (i)/(h)

     59.0     62.1     58.8     56.6     57.6
*

Preliminary data. Subject to change prior to filings with applicable regulatory agencies.

(1)

Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements.

(2)

Includes the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology net of deferred taxes.

(3)

Includes the impact of the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology.

(4)

Based on a federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes.

 

 

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LINE OF BUSINESS FINANCIAL PERFORMANCE (a)  
($ in millions)    Net Income Attributable                       Net Income Attributable        
      to U.S. Bancorp      Percent Change          to U.S. Bancorp        
Business Line    2Q
2021
     1Q
2021
    

2Q  

2020  

     2Q21 vs
1Q21
    2Q21 vs
2Q20
          YTD
2021
     YTD
2020
    Percent
Change
 

Corporate and Commercial Banking

     $378        $424        $574          (10.8     (34.1        $802        $716       12.0  

Consumer and Business Banking

     739        650        656          13.7       12.7          1,389        1,263       10.0  

Wealth Management and Investment Services

     149        184        205          (19.0     (27.3        333        425       (21.6

Payment Services

     443        491        391          (9.8     13.3          934        691       35.2  

Treasury and Corporate Support

     273        531        (1,137)         (48.6     nm          804        (1,235     nm  
   

Consolidated Company

       $1,982        $2,280        $689          (13.1     nm          $4,262        $1,860       nm  
   

(a) preliminary data

 

                                                                         

Lines of Business

The Company’s major lines of business are Corporate and Commercial Banking, Consumer and Business Banking, Wealth Management and Investment Services, Payment Services, and Treasury and Corporate Support. These operating segments are components of the Company about which financial information is prepared and is evaluated regularly by management in deciding how to allocate resources and assess performance. Business line results are derived from the Company’s business unit profitability reporting systems by specifically attributing managed balance sheet assets, deposits and other liabilities and their related income or expense. Designations, assignments and allocations change from time to time as management systems are enhanced, methods of evaluating performance or product lines change or business segments are realigned to better respond to the Company’s diverse customer base. During 2021, certain organization and methodology changes were made and, accordingly, prior period results were restated and presented on a comparable basis.

 

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CORPORATE AND COMMERCIAL BANKING (a)  
($ in millions)                        Percent Change                          
     

2Q

2021

    

1Q

2021

   

2Q  

2020  

    

2Q21 vs

1Q21

   

2Q21 vs

2Q20

         

YTD

2021

   

YTD

2020

    

Percent

Change

 

Condensed Income Statement

                          

Net interest income (taxable-equivalent basis)

     $683        $672       $878          1.6       (22.2        $1,355       $1,663        (18.5

Noninterest income

     255        259       339          (1.5     (24.8        514       610        (15.7

Securities gains (losses), net

     --          --         --            --         --            --         --          --    

Total net revenue

     938        931       1,217          .8       (22.9        1,869       2,273        (17.8

Noninterest expense

     411        405       430          1.5       (4.4        816       873        (6.5

Other intangibles

     --          --         --            --         --            --         --          --    

Total noninterest expense

     411        405       430          1.5       (4.4        816       873        (6.5

Income before provision and taxes

     527        526       787          .2       (33.0        1,053       1,400        (24.8

Provision for credit losses

     23        (40     22          nm       4.5          (17     446        nm  

Income before income taxes

     504        566       765          (11.0     (34.1        1,070       954        12.2  

Income taxes and taxable-equivalent adjustment

     126        142       191          (11.3     (34.0        268       238        12.6  

Net income

     378        424       574          (10.8     (34.1        802       716        12.0  

Net (income) loss attributable to noncontrolling interests

     --          --         --            --         --            --         --          --    

Net income attributable to U.S. Bancorp

     $378        $424       $574          (10.8     (34.1        $802       $716        12.0  
   

Average Balance Sheet Data

                        

Loans

     $95,145        $94,866       $122,930          .3       (22.6        $95,006       $113,147        (16.0

Other earning assets

     4,409        4,308       3,847          2.3       14.6          4,359       4,201        3.8  

Goodwill

     1,647        1,647       1,647          --         --            1,647       1,647        --    

Other intangible assets

     5        5       6          --         (16.7        5       7        (28.6

Assets

     107,058        107,016       135,484          --         (21.0        107,037       125,394        (14.6
   

Noninterest-bearing deposits

     54,958        51,074       38,749          7.6       41.8          53,027       34,074        55.6  

Interest-bearing deposits

     66,023        67,784       95,388          (2.6     (30.8        66,899       88,034        (24.0

Total deposits

     120,981        118,858       134,137          1.8       (9.8        119,926       122,108        (1.8
   

Total U.S. Bancorp shareholders’ equity

     13,200        13,712       15,274          (3.7     (13.6        13,455       14,631        (8.0
   

(a) preliminary data

 

                                                                        

Corporate and Commercial Banking offers lending, equipment finance and small-ticket leasing, depository services, treasury management, capital markets services, international trade services and other financial services to middle market, large corporate, commercial real estate, financial institution, non-profit and public sector clients.

Corporate and Commercial Banking contributed $378 million of the Company’s net income in the second quarter of 2021, compared with $574 million in the second quarter of 2020. Total net revenue decreased $279 million (22.9 percent) due to a decrease of $195 million (22.2 percent) in net interest income and a decrease of $84 million (24.8 percent) in total noninterest income. Net interest income decreased primarily due to lower average loan and deposit balances as well as the impact of declining interest rates on the margin benefit from deposits, partially offset by favorable deposit mix with higher noninterest-bearing balances, higher loan fees, and slightly higher loan spreads. Loan balances increased significantly in the second quarter of 2020 as corporate customers utilized lines of credit to build liquidity during the pandemic. These balances were substantially repaid in 2020. Total noninterest income decreased year-over-year primarily driven by lower capital markets activities, including trading revenue, partially offset by higher non-yield loan fees on unused commitments and stronger treasury management revenue due to core growth driven by the economic recovery as well as higher IRS volumes as a result of the extended tax filing deadline. Capital markets activities were substantially higher in the second quarter of 2020 as corporate customers increased liquidity given the pandemic and significant decline in longer term interest rates. Total noninterest expense decreased $19 million (4.4 percent) compared with a year ago primarily due to lower production incentives, lower FDIC insurance expense and higher capitalized loan costs, partially offset by an increase in net shared services expense driven by technology development and investment in infrastructure. The provision for credit losses increased $1 million (4.5 percent) primarily due to an unfavorable change in the reserve allocation driven by loan balance growth compared to a decline in end of period outstanding loan balances in the second quarter of 2020.

 

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CONSUMER AND BUSINESS BANKING (a)          
($ in millions)                       Percent Change                          
     

2Q

2021

   

1Q

2021

   

2Q  

2020  

    

2Q21 vs

1Q21

   

2Q21 vs

2Q20

         

YTD

2021

   

YTD

2020

    

Percent

Change

 

Condensed Income Statement

                       

Net interest income (taxable-equivalent basis)

     $1,650       $1,627       $1,475          1.4       11.9            $3,277       $3,007        9.0  

Noninterest income

     646       578       886          11.8       (27.1        1,224       1,607        (23.8

Securities gains (losses), net

     --         --         --            --         --            --         --          --    

Total net revenue

     2,296       2,205       2,361          4.1       (2.8        4,501       4,614        (2.4

Noninterest expense

     1,404       1,379       1,372          1.8       2.3          2,783       2,689        3.5  

Other intangibles

     3       3       4          --         (25.0        6       8        (25.0

Total noninterest expense

     1,407       1,382       1,376          1.8       2.3          2,789       2,697        3.4  

Income before provision and taxes

     889       823       985          8.0       (9.7        1,712       1,917        (10.7

Provision for credit losses

     (96     (44     110          nm       nm          (140     233        nm  

Income before income taxes

     985       867       875          13.6       12.6          1,852       1,684        10.0  

Income taxes and taxable-equivalent adjustment

     246       217       219          13.4       12.3          463       421        10.0  

Net income

     739       650       656          13.7       12.7          1,389       1,263        10.0  

Net (income) loss attributable to noncontrolling interests

     --         --         --            --         --            --         --          --    

Net income attributable to U.S. Bancorp

     $739       $650       $656          13.7       12.7          $1,389       $1,263        10.0  
   

Average Balance Sheet Data

                       

Loans

     $152,470       $153,178       $150,210          (.5     1.5          $152,822       $148,462        2.9  

Other earning assets

     8,033       10,203       6,576          (21.3     22.2          9,112       5,772        57.9  

Goodwill

     3,475       3,475       3,475          --         --            3,475       3,525        (1.4

Other intangible assets

     2,827       2,491       1,935          13.5       46.1          2,660       2,173        22.4  

Assets

     173,285       175,525       167,514          (1.3     3.4          174,399       164,690        5.9  
   

Noninterest-bearing deposits

     40,477       39,028       34,499          3.7       17.3          39,757       31,130        27.7  

Interest-bearing deposits

     174,356       166,707       144,158          4.6       20.9          170,552       138,888        22.8  

Total deposits

     214,833       205,735       178,657          4.4       20.2          210,309       170,018        23.7  
   

Total U.S. Bancorp shareholders’ equity

     13,361       13,561       13,752          (1.5     (2.8        13,460       13,389        .5  
   

(a) preliminary data

 

                                                                       

Consumer and Business Banking delivers products and services through banking offices, telephone servicing and sales, on-line services, direct mail, ATM processing and mobile devices. It encompasses community banking, metropolitan banking and indirect lending, as well as mortgage banking.

Consumer and Business Banking contributed $739 million of the Company’s net income in the second quarter of 2021, compared with $656 million in the second quarter of 2020. Total net revenue decreased $65 million (2.8 percent) due to a decrease in total noninterest income of $240 million (27.1 percent), partially offset by an increase of $175 million (11.9 percent) in net interest income. Net interest income reflected continued strong growth in deposit balances as well as favorable deposit mix, favorable loan spreads driven by growth in installment loans and GNMA buybacks, and higher loan fees driven by PPP loan forgiveness. This was partially offset by lower deposit spreads. Total noninterest income decreased primarily due to lower mortgage banking revenue reflecting lower production volume and related gain on sale margins as refinancing activities decline, partially offset by the favorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities. Partially offsetting the decline in mortgage banking fee revenues, retail product fees were stronger driven by retail leasing end of term residual gains and related fees while deposit service charges increased as a result of customer activity and ATM processing revenue. Total noninterest expense increased $31 million (2.3 percent) primarily due to an increase in net shared services expense due to investments in digital capabilities. The provision for credit losses decreased $206 million due to a favorable change in the reserve allocation primarily reflecting lower delinquency rates in consumer portfolios and a reduction in end of period outstanding balances in the second quarter of 2021 compared with growth in the second quarter of 2020.

 

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WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)  
($ in millions)                         Percent Change                            
      2Q
2021
     1Q
2021
     2Q  
2020  
     2Q21 vs
1Q21
    2Q21 vs
2Q20
          YTD
2021
     YTD
2020
     Percent
Change
 

Condensed Income Statement

                          

Net interest income (taxable-equivalent basis)

     $167        $203        $250          (17.7     (33.2        $370        $534        (30.7

Noninterest income

     547        531        499          3.0       9.6          1,078        1,001        7.7  

Securities gains (losses), net

     --          --          --          --         --            --          --          --    

Total net revenue

     714        734        749          (2.7     (4.7        1,448        1,535        (5.7

Noninterest expense

     501        479        474          4.6       5.7          980        941        4.1  

Other intangibles

     4        2        3          nm       33.3          6        6        --    

Total noninterest expense

     505        481        477          5.0       5.9          986        947        4.1  

Income before provision and taxes

     209        253        272          (17.4     (23.2        462        588        (21.4

Provision for credit losses

     10        8        (2)         25.0       nm          18        21        (14.3

Income before income taxes

     199        245        274          (18.8     (27.4        444        567        (21.7

Income taxes and taxable-equivalent adjustment

     50        61        69          (18.0     (27.5        111        142        (21.8

Net income

     149        184        205          (19.0     (27.3        333        425        (21.6

Net (income) loss attributable to noncontrolling interests

     --          --          --          --         --            --          --          --    

Net income attributable to U.S. Bancorp

     $149        $184        $205          (19.0     (27.3        $333        $425        (21.6
   

Average Balance Sheet Data

                          

Loans

     $12,926        $12,446        $11,206          3.9       15.3          $12,688        $10,909        16.3  

Other earning assets

     237        279        285          (15.1     (16.8        258        283        (8.8

Goodwill

     1,618        1,619        1,616          (.1     .1          1,618        1,617        .1  

Other intangible assets

     84        42        40          nm       nm          63        42        50.0  

Assets

     15,916        15,682        14,335          1.5       11.0          15,800        14,153        11.6  
   

Noninterest-bearing deposits

     22,249        20,377        16,396          9.2       35.7          21,318        14,848        43.6  

Interest-bearing deposits

     61,146        71,766        65,466          (14.8     (6.6        66,427        67,195        (1.1

Total deposits

     83,395        92,143        81,862          (9.5     1.9          87,745        82,043        7.0  
   

Total U.S. Bancorp shareholders’ equity

     2,640        2,574        2,481          2.6       6.4          2,607        2,475        5.3  
   

(a) preliminary data

 

                                                                          

Wealth Management and Investment Services provides private banking, financial advisory services, investment management, retail brokerage services, insurance, trust, custody and fund servicing through four businesses: Wealth Management, Global Corporate Trust & Custody, U.S. Bancorp Asset Management and Fund Services.

Wealth Management and Investment Services contributed $149 million of the Company’s net income in the second quarter of 2021, compared with $205 million in the second quarter of 2020. Total net revenue decreased $35 million (4.7 percent) year-over-year reflecting a decrease in net interest income of $83 million (33.2 percent), partially offset by an increase of $48 million (9.6 percent) in noninterest income. Net interest income decreased year-over-year primarily due to the declining margin benefit of deposits given lower interest rates, partially offset by higher noninterest-bearing deposits and favorable deposit mix. Total noninterest income increased primarily due to the impact of core business growth on trust and investment management fees and favorable market conditions, partially offset by higher fee waivers related to money market funds. Total noninterest expense increased $28 million (5.9 percent) compared with the second quarter of 2020 reflecting higher compensation expense as a result of performance-based incentives, merit, and revenue-related compensation and an increase in net shared services expense. The provision for credit losses increased $12 million reflecting an unfavorable change in the reserve allocation primarily driven by increased loan balance growth and stable credit quality relative to credit quality improvement in the second quarter of 2020.

 

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PAYMENT SERVICES (a)          
($ in millions)                        Percent Change                           
      2Q
2021
     1Q
2021
    2Q  
2020  
     2Q21 vs
1Q21
    2Q21 vs
2Q20
          YTD
2021
     YTD
2020
     Percent
Change
 

Condensed Income Statement

                                  

Net interest income (taxable-equivalent basis)

     $596        $629       $610          (5.2     (2.3        $1,225        $1,267        (3.3

Noninterest income

     913        785       658          16.3       38.8          1,698        1,452        16.9  

Securities gains (losses), net

     --          --         --            --         --            --          --          --    

Total net revenue

     1,509        1,414       1,268          6.7       19.0          2,923        2,719        7.5  

Noninterest expense

     794        767       741          3.5       7.2          1,561        1,495        4.4  

Other intangibles

     33        33       36          --         (8.3        66        71        (7.0

Total noninterest expense

     827        800       777          3.4       6.4          1,627        1,566        3.9  

Income before provision and taxes

     682        614       491          11.1       38.9          1,296        1,153        12.4  

Provision for credit losses

     91        (41     (31)         nm       nm          50        231        (78.4

Income before income taxes

     591        655       522          (9.8     13.2          1,246        922        35.1  

Income taxes and taxable-equivalent adjustment

     148        164       131          (9.8     13.0          312        231        35.1  

Net income

     443        491       391          (9.8     13.3          934        691        35.2  

Net (income) loss attributable to noncontrolling interests

     --          --         --            --         --            --          --          --    

Net income attributable to U.S. Bancorp

     $443        $491       $391          (9.8     13.3          $934        $691        35.2  

Average Balance Sheet Data

                         

Loans

     $30,030        $29,630       $30,321          1.3       (1.0        $29,831        $32,005        (6.8

Other earning assets

     5        5       5          --         --            5        6        (16.7

Goodwill

     3,177        3,173       3,101          .1       2.5          3,176        2,977        6.7  

Other intangible assets

     519        544       590          (4.6     (12.0        531        573        (7.3

Assets

     35,620        35,095       35,011          1.5       1.7          35,359        36,647        (3.5

Noninterest-bearing deposits

     5,030        5,264       3,165          (4.4     58.9          5,146        2,318        nm  

Interest-bearing deposits

     141        132       117          6.8       20.5          137        116        18.1  

Total deposits

     5,171        5,396       3,282          (4.2     57.6          5,283        2,434        nm  

Total U.S. Bancorp shareholders’ equity

     7,413        7,658       6,975          (3.2     6.3          7,535        7,042        7.0  

(a) preliminary data

 

                                                                         

Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services, consumer lines of credit and merchant processing.

Payment Services contributed $443 million of the Company’s net income in the second quarter of 2021, compared with $391 million in the second quarter of 2020. Total net revenue increased $241 million (19.0 percent) primarily due to higher noninterest income of $255 million (38.8 percent), partially offset by slightly lower net interest income of $14 million (2.3 percent). Net interest income decreased primarily due to lower average loan balances partly due to higher credit card payment rates and loan fees, partially offset by higher loan yields and higher deposit balances as a result of state unemployment programs utilizing prepaid debit cards. Total noninterest income increased year-over-year mainly due to continued strengthening of consumer and business spending across most sectors driven by government stimulus, local jurisdictions reducing restrictions and consumer behaviors normalizing. As a result, there was strong growth in credit and debit card revenue driven by higher net interchange revenue related to sales volume and prepaid card processing activities related to government stimulus programs as well as stronger transaction and cash advance fees along with higher corporate payment products revenue driven by improving business spending and higher merchant processing services revenue driven by higher sales volume. Total noninterest expense increased $50 million (6.4 percent) reflecting the timing of marketing campaigns and incremental costs related to the prepaid card business. The provision for credit losses increased $122 million primarily due to balance growth in the current period, compared to a decrease in balances in the prior year quarter, partially offset by lower delinquency rates in the second quarter of 2021.

 

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TREASURY AND CORPORATE SUPPORT (a)  
($ in millions)                       Percent Change                   
      2Q
2021
    1Q
2021
   

2Q

2020

     2Q21 vs
1Q21
    2Q21 vs
2Q20
          YTD
2021
    YTD
2020
    Percent
Change
 

Condensed Income Statement

                        

Net interest income (taxable-equivalent basis)

     $68       $(42)       $11          nm       nm          $26       $--         nm  

Noninterest income

     215       203       151          5.9       42.4          418       338       23.7  

Securities gains (losses), net

     43       25       81          72.0       (46.9        68       131       (48.1

Total net revenue

     326       186       243          75.3       34.2          512       469       9.2  

Noninterest expense

     237       311       258          (23.8     (8.1        548       551       (.5

Other intangibles

     --         --         --            --         --            --         --         --    

Total noninterest expense

     237       311       258          (23.8     (8.1        548       551       (.5

Income (loss) before provision and taxes

     89       (125     (15)         nm       nm          (36     (82     56.1  

Provision for credit losses

     (198     (710     1,638          72.1       nm          (908     1,799       nm  

Income (loss) before income taxes

     287       585       (1,653)         (50.9     nm          872       (1,881     nm  

Income taxes and taxable-equivalent adjustment

     8       49       (522)         (83.7     nm          57       (660     nm  

Net income (loss)

     279       536       (1,131)         (47.9     nm          815       (1,221     nm  

Net (income) loss attributable to noncontrolling interests

     (6     (5     (6)         (20.0     --            (11     (14     21.4  

Net income (loss) attributable to U.S. Bancorp

     $273       $531       $(1,137)         (48.6     nm          $804       $(1,235     nm  
   

Average Balance Sheet Data

                      

Loans

     $3,713       $3,869       $3,440          (4.0     7.9          $3,791       $3,359       12.9  

Other earning assets

     193,783       188,927       165,299          2.6       17.2          191,367       152,777       25.3  

Goodwill

     --         --         --            --         --            --         --         --    

Other intangible assets

     --         --         --            --         --            --         --         --    

Assets

     219,486       215,416       191,962          1.9       14.3          217,462       178,672       21.7  
   

Noninterest-bearing deposits

     2,583       2,609       2,297          (1.0     12.5          2,596       2,254       15.2  

Interest-bearing deposits

     2,247       1,623       3,068          38.4       (26.8        1,936       4,196       (53.9

Total deposits

     4,830       4,232       5,365          14.1       (10.0        4,532       6,450       (29.7
   

Total U.S. Bancorp shareholders’ equity

     16,348       15,224       13,759          7.4       18.8          15,789       14,156       11.5  
   

(a) preliminary data

 

                                                                      

Treasury and Corporate Support includes the Company’s investment portfolios, funding, capital management, interest rate risk management, income taxes not allocated to the business lines, including most investments in tax-advantaged projects, and the residual aggregate of those expenses associated with corporate activities that are managed on a consolidated basis.

Treasury and Corporate Support contributed $273 million of the Company’s net income in the second quarter of 2021, compared with a net loss of $1,137 million in the second quarter of 2020. Total net revenue increased $83 million (34.2 percent) year-over-year due to an increase of $57 million in net interest income and an increase in noninterest income of $26 million (11.2 percent). Net interest income increased primarily due to favorable funding and deposit mix, partially offset by higher premium amortization in the investment portfolio compared with a year ago. Total noninterest income increased primarily due to higher other noninterest income driven by tax-advantaged investment syndication revenue, partially offset by lower securities gains. Total noninterest expense decreased $21 million (8.1 percent) primarily due to lower COVID-19 related accruals compared with the second quarter of 2020 including recognizing liabilities related to future delivery exposures for merchant and airline processing and lower net shared services expense, partially offset by higher compensation expense as a result of merit and performance-based incentives as well as related payroll taxes and benefits. The provision for credit losses decreased $1,836 million reflecting the residual impact of changes in the allowance for credit losses being impacted by deteriorating economic conditions in the second quarter of 2020 compared to improving conditions in the current year quarter. Income taxes are assessed to each line of business at a managerial tax rate of 25.0 percent with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Treasury and Corporate Support.

 

LOGO

 

        7

EX-99.2

Slide 1

U.S. Bancorp 2Q21 Earnings Conference Call July 15, 2021 Exhibit 99.2


Slide 2

Forward-looking Statements and Additional Information The following information appears in accordance with the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. The COVID-19 pandemic is adversely affecting U.S. Bancorp, its customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities, reduce the availability of funding to certain financial institutions, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by changes in interest rates; further increases in unemployment rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; civil unrest; changes in customer behavior and preferences; breaches in data security, including as a result of work-from-home arrangements; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk. For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2020, on file with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Corporate Risk Profile” contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. In addition, factors other than these risks also could adversely affect U.S. Bancorp’s results, and the reader should not consider these risks to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events. This presentation includes non-GAAP financial measures to describe U.S. Bancorp’s performance. The calculations of these measures are provided in the Appendix. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.


Slide 3

2Q21 Highlights * Taxable-equivalent basis; see slide 26 for calculation ** Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology was 9.5% as of 6/30/21. *** Earnings returned (millions) = total common dividends paid and aggregate value of common shares repurchased


Slide 4

Performance Ratios Efficiency Ratio* & Net Interest Margin** Return on Average Common Equity Return on Tangible Common Equity* Return on Average Assets * Non-GAAP; see slides 26 and 27 for calculations ** Net interest margin on a taxable-equivalent basis


Slide 5

Digital Engagement Trends Three months ended * Represents core Consumer Banking customers active in at least one channel in the previous 90 days ** This chart reflects digital sales definitions aligned to Finalta Total Digital includes both online and mobile platforms


Slide 6

Average Loans 0.1% linked quarter -7.5% year-over-year On a linked quarter basis, average total loans were higher primarily driven by higher total commercial loans and higher other retail loans driven by growth in installment loans, partially offset by lower residential mortgages as a result of customer paydowns. On a year-over-year basis, average total loans were lower primarily driven by a decline in total commercial loans, lower home equity and second mortgages, and lower commercial real estate loans as a result of paydowns, partially offset by growth in other retail loans driven by growth in installment loans. $ in billions


Slide 7

Average Deposits +0.7% linked quarter +6.4% year-over-year Interest-bearing Deposits Average noninterest-bearing (NIB) deposits increased on both a linked quarter and year-over-year basis. On a linked quarter basis, the increase was driven by Corporate and Commercial Banking, Wealth Management and Investment Services, and Consumer and Business Banking, while increases across all business lines drove year-over-year growth. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, were lower on both a linked quarter and year-over-year basis. The growth in average NIB deposits and total average savings deposits year-over-year was primarily a result of the actions by the federal government to increase liquidity in the financial system and government stimulus programs. $ in billions


Slide 8

Credit Quality NCO Ratio -6 bps QoQ -30 bps YoY NPAs -11.9% QoQ -9.7% YoY $ in millions, except allowance for credit losses in billions Allowance for Credit Losses by Loan Class, 2Q21   Amount ($B) Loans and Leases Outstanding (%) Commercial $1.8 1.8% Commercial Real Estate $1.4 3.6% Residential Mortgage $0.5 0.7% Credit Card $1.9 8.7% Other Retail $1.0 1.7% Total $6.6 2.2%


Slide 9

Earnings Summary


Slide 10

Net Interest Income Linked Quarter Net interest income increased, primarily driven by higher yields and volumes in the investment portfolio, favorable earning asset mix, higher loan fees, one more day in the quarter, and favorable deposit and funding mix, partially offset by lower loan yields. The net interest margin increased, reflecting changes in the investment portfolio mix, favorable funding and deposit mix, and higher loan fees, partially offset by lower loan yields. Year-over-Year Net interest income decreased, primarily driven by the impact of lower rates compared with a year ago and lower loan volumes, partially offset by the benefit of deposit and funding mix as well as higher loan fees. The net interest margin decreased, primarily due to the mix of earning assets and higher premium amortization within the investment portfolio, partially offset by the net benefit of funding composition and higher loan fees. 2.4% linked quarter -1.9% year-over-year $ in millions Net interest income on a taxable-equivalent basis; see slide 26 for calculation


Slide 11

Noninterest Income 10.0% linked quarter 0.2% year-over-year Linked Quarter Mortgage banking revenue increased, due to the favorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities, partially offset by lower production volume and related gain on sale margins. Payment services revenue increased, primarily driven by higher sales volume as the global economy continues to recover from the impacts of the COVID-19 pandemic. Year-over-Year Payment services revenue increased, due to strong growth in credit and debit card revenue driven by higher net interchange revenue related to sales volume and prepaid card processing activities related to government stimulus programs as well as stronger transaction and cash advance fees, higher corporate payment products revenue reflecting improving business spending, and higher merchant processing services revenue driven by higher sales volume. Deposit service charges increased, primarily due to customer activity and ATM processing revenue. Other noninterest income increased, primarily due to higher retail leasing end of term residual gains and related fees and higher tax-advantaged investment syndication revenue. $ in millions Payments = credit and debit card, corporate payment products and merchant processing Service charges = deposit service charges and treasury management All other = commercial products, investment products fees, securities gains (losses) and other


Slide 12

Payment Services Payment Fees as a % of Net Revenue 2019 2Q21 Merchant Acquiring Retail Payment Solutions Corporate Payment Solutions All Other Revenue Total payments revenue, which includes net interest income and fee revenue, accounted for 27% of FY19 net revenue and 26% of 2Q21 net revenue Merchant Acquiring Travel & Hospitality* 22% 20% Airline 15% 8% All Other 63% 72% CPS Travel & Entertainment 18% 7% All Other 82% 93% RPS** Travel*** (Credit & Debit) 7% 4% All Other 93% 96% % of Merchant Acquiring Volume 2019 2Q21 % of CPS Volume 2019 2Q21 % of RPS Volume 2019 2Q21 * Travel & Hospitality includes hotels, restaurants, entertainment and travel ** RPS includes credit, debit, and prepaid *** Travel includes airlines, auto rental, hotel/motel, other transportation, and travel agencies **** Monthly data ranging from January 2020 – June 2021 Merchant Sales Volume Growth**** 0% CPS Sales Volume Growth**** 0% RPS** Sales Volume Growth**** 0% Travel & Hospitality* All Other Total Airline Travel & Entertainment Total All Other Travel*** (Credit & Debit) All Other Total Volume Growth vs. 2019 Comparable Period Volumes in each of our payments businesses continue to rebound due to a strengthening economy and increasing spend activity. In 2Q21, prepaid card related fee revenue was 17% of total credit and debit card fee revenue (compared to 11% in FY' 19).


Slide 13

Noninterest Expense +0.2% linked quarter +2.1% year-over-year Linked Quarter Compensation decreased, due to the impact of seasonally higher stock-based compensation in the first quarter partially offset by the impact of seasonal merit increases, one additional day in the second quarter, performance-based incentives, and higher variable compensation. Employee benefits expense decreased, driven by higher payroll taxes in the first quarter. Marketing and business development expense increased, primarily due to the timing of marketing campaigns supporting business development. Year-over-Year Compensation expense increased, due to performance-based incentives, merit, and revenue-related compensation driven by business production. Technology and communications expense increased, primarily due to higher call center volume related to prepaid cards and capital expenditures supporting business technology investments. Other noninterest expense decreased, primarily due to higher COVID-19 related accruals in the second quarter of 2020 including recognizing liabilities related to future delivery exposures for merchant and airline processing as well as lower costs related to tax-advantaged projects and lower FDIC insurance expense in the current year quarter. $ in millions PPS = postage, printing and supplies


Slide 14

Capital Position * Ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology ** Non-GAAP; see slide 28 for calculations


Slide 15

Appendix


Slide 16

Average Loans vs. 2Q20 Average total loans decreased by $23.8 billion, or 7.5% Average residential mortgage loans increased by $2.2 billion, or 3.1% Average commercial loans decreased by $25.1 billion, or 19.6% Average commercial real estate loans decreased by $2.5 billion, or 6.1% vs. 1Q21 Average total loans increased by $0.3 billion, or 0.1% Average commercial loans increased by $0.9 billion, or 0.9% Average residential mortgage loans decreased by $1.9 billion, or 2.5% Average other retail loans increased by $1.5 billion, or 2.7% Key Points Year-over-Year Growth 10.0% 6.4% 2.5% (1.2%) (7.5%) Commercial CRE Res Mtg Retail Credit Card Average Loans ($bn)


Slide 17

Year-over-Year Growth 16.8% 15.9% 18.5% 17.5% 6.4% Time Money Market Checking and Savings Noninterest-bearing Average Deposits Key Points Average Deposits ($bn) vs. 2Q20 Average total deposits increased by $25.9 billion, or 6.4% Average low-cost deposits (NIB, interest checking, savings and money market) increased by $44.6 billion, or 12.4% vs. 1Q21 Average total deposits increased by $2.8 billion, or 0.7% Average low-cost deposits (NIB, interest checking, savings and money market) increased by $5.0 billion, or 1.3%


Slide 18

Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm2Q20 1Q21 2Q21 Average Loans$128,039 $102,091 $102,974 30-89 Delinquencies0.33% 0.19% 0.17% 90+ Delinquencies0.07% 0.06% 0.04% Nonperforming Loans0.38% 0.33% 0.28% Linked Quarter Growth 20.8% (9.8%) (7.9%) (4.1%) 0.9% Average loans increased by 0.9% on a linked quarter basis Net charge-offs and delinquencies continue to show improvement given economic recovery


Slide 19

A&D Const $183 Multi-family $3,737 Retail $223 Residential Construction $2,178 Office $1,057 Other $2,926 Residential Land $539 $mm2Q20 1Q21 2Q21 Average Loans$41,088 $38,786 $38,564 30-89 Delinquencies0.25% 0.31%0.08% 90+ Delinquencies- %0.01%0.01% Nonperforming Loans0.47% 0.93% 0.80% Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points Linked Quarter Growth 2.5% (0.4%) (2.0%) (3.3%) (0.6%) Average loans decreased by 0.6% on a linked quarter basis Net charge-offs increased due to lower recoveries linked quarter


Slide 20

Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm2Q201Q212Q21 Average Loans$71,122 $75,201 $73,351 30-89 Delinquencies0.34%0.28%0.24% 90+ Delinquencies0.16% 0.19% 0.16% Nonperforming Loans0.34%0.34%0.33% Linked Quarter Growth 0.3% 6.6% 1.3% (2.1%) (2.5%) Originations continued to be high credit quality (weighted average FICO of 774, weighted average LTV of 70%) Customers in payment relief have continued to decline * Represents residential mortgage loan balances in forbearance; excludes GNMA loans, whose repayments are insured by the FHA or guaranteed by the Department of VA ($3.5 billion or 32.6% of loans in 2Q21)


Slide 21

Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm2Q201Q212Q21 Average Loans$21,510 $21,144$21,116 30-89 Delinquencies1.08% 0.90%0.72% 90+ Delinquencies1.22%0.95%0.70% Nonperforming Loans- %- %- % Linked Quarter Growth (9.8%) 2.5% (0.5%) (3.6%) (0.1%) Year over year decrease in average loans was driven by lower consumer spending and reduced marketing during the pandemic Credit quality of new originations remains strong Net charge-off rate remained relatively flat linked quarter


Slide 22

Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Points Linked Quarter Growth (3.0%) (5.8%) (5.4%) (5.9%) (5.8%) Key Statistics Key Statistics $mm2Q201Q212Q21 Average Loans$14,386 $12,062 $11,368 30-89 Delinquencies0.46%0.37%0.33% 90+ Delinquencies0.37%0.36%0.36% Nonperforming Loans0.79%1.09%1.16% Loans: 8% Wtd Avg LTV*: 74% Wtd Avg FICO*: 755 Lines: 92% Wtd Avg LTV*: 69% Wtd Avg FICO*: 760 *LTV and FICO at origination High-quality originations (weighted average FICO on commitments of 801, weighted average CLTV of 66%) driven primarily through the retail branch network to existing bank customers on their primary residences Net charge-offs continue to remain at low levels Nonperforming loans continue to increase due to foreclosure moratorium


Slide 23

Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm2Q201Q212Q21 Average Loans$8,412 $7,975 $7,873 30-89 Delinquencies0.51%0.34%0.31% 90+ Delinquencies0.06%0.01%0.03% Nonperforming Loans0.23%0.18%0.17% Linked Quarter Growth (0.7%) 0.3% (1.6%) (3.9%) (1.3%) Continued high-quality originations during 2Q21 (weighted average FICO of 782) Delinquencies remained at low levels and were favorably impacted by strong borrower liquidity in 2Q21 Charge-offs were lower driven by the favorable impact of higher vehicle values on both residual and credit losses * Manheim Used Vehicle Value Index source: www.manheimconsulting.com, January 1995 = 100, quarter value = average monthly ending values


Slide 24

Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm2Q201Q212Q21 Average Loans$33,550 $36,730 $39,038 30-89 Delinquencies0.43%0.40%0.35% 90+ Delinquencies0.10%0.07%0.05% Nonperforming Loans0.14%0.08%0.07% Linked Quarter Growth - % 3.6% 3.3% 2.2% 6.3% Average loans increased linked quarter due to strong volume in auto and recreational finance loans Delinquency and charge-offs remained low driven by strong borrower liquidity and generally lower consumer debt levels coming out of the pandemic


Slide 25

Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm2Q201Q212Q21 Average Loans$18,758 $19,881 $21,198 30-89 Delinquencies0.56%0.55%0.47% 90+ Delinquencies0.07%0.06%0.04% Nonperforming Loans0.21%0.11%0.09% Direct: 3% Wtd Avg FICO: 763 NCO: (0.15%) Indirect: 97% Wtd Avg FICO: 785 NCO: (0.01%) Linked Quarter Growth (2.7%) 0.3% 3.0% 2.5% 6.6% High quality originations reflect focus on prime credits (weighted average FICO of 790) Delinquency and charge-offs remained low driven by strong borrower liquidity and continuing high used car values Auto loans are included in Other Retail category


Slide 26

Non-GAAP Financial Measures (4) – see slide 29 for corresponding notes


Slide 27

Non-GAAP Financial Measures (1) – see slide 29 for corresponding notes


Slide 28

Non-GAAP Financial Measures * Preliminary data. Subject to change prior to filings with applicable regulatory agencies. (1), (2), (3) – see slide 29 for corresponding notes


Slide 29

Notes Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements. Includes the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology net of deferred taxes. Includes the impact of the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology. Based on a federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes.


Slide 30

U.S. Bancorp 2Q21 Earnings Conference Call July 15, 2021

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