8-K
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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): January 19, 2022

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 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 January 19, 2022, U.S. Bancorp (the “Company”) issued a press release reporting quarter-ended December 31, 2021 results, and posted on its website its 4Q21 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 4Q21 Earnings Conference Call Presentation is included as Exhibit 99.2 hereto and is incorporated herein by reference. The information included in the 4Q21 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 4Q21 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 January 19, 2022, deemed “filed” under the Securities Exchange Act of 1934.

 

  99.2

4Q21 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: January 19, 2022

EX-99.1

Exhibit 99.1

 

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U.S. Bancorp Reports Fourth Quarter and Full Year 2021 Results

 

 Full year net income of $8.0 billion and full year net revenue of $22.8 billion

 Full year return on average assets of 1.43% and return on average common equity of 16.0%

 Common Equity Tier 1 capital ratio of 10.0% and strong levels of liquidity

 

 

    4Q21 and Full Year Key Financial Data

  

 

4Q21 and Full Year Highlights

    

           

 PROFITABILITY METRICS

    4Q21       3Q21       4Q20           
Full Year
2021
 
 
   
Full Year
2020
 
 

Return on average assets (%)

 

 

 

 

1.16

 

 

    1.45       1.10         1.43       .93  

Return on average common
equity (%)

    13.0       15.9       12.1         16.0       10.0  

Return on tangible common
equity (%) (a)

    16.6       20.2       15.6         20.4       13.2  

Net interest margin (%)

    2.40       2.53       2.57         2.49       2.68  

Efficiency ratio (%) (a)

 

 

 

 

 

62.3

 

 

    58.4       58.8         60.4       57.8  

 INCOME STATEMENT (b)

    4Q21       3Q21       4Q20          
Full Year
2021
 
 
   
Full Year
2020
 
 

Net interest income (taxable-equivalent basis)

 

 

 

 

$3,150

 

 

    $3,197       $3,201         $12,600       $12,924  

Noninterest income

    $2,534       $2,693       $2,550         $10,227       $10,401  

Net income attributable to U.S. Bancorp

    $1,673       $2,028       $1,519         $7,963       $4,959  

Diluted earnings per common share

    $1.07       $1.30       $.95         $5.10       $3.06  

Dividends declared per common share

 

 

 

 

 

$.46

 

 

    $.46       $.42         $1.76       $1.68  

 BALANCE SHEET (b)

    4Q21       3Q21       4Q20          
Full Year
2021
 
 
   
Full Year
2020
 
 

Average total loans

 

 

 

 

$302,755

 

 

    $296,739       $302,308         $296,965       $307,269  

Average total deposits

    $449,838       $431,487       $422,413         $434,281       $398,615  

Net charge-off ratio

    .17%       .20%       .58%         .23%        .58%   

Book value per common share (period end)

    $32.71       $32.22       $31.26        

Basel III standardized CET1 (c)

 

 

 

 

 

10.0%

 

  

    10.2%        9.7%         

 

 
(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

 

 

 

  Net income of $1,673 million and diluted earnings per common share of $1.07 for 4Q21

 

  Return on average assets of 1.16% and return on average common equity of 13.0% for 4Q21

 

  Net revenue decline driven by lower mortgage banking revenue, partially offset by higher trust and investment management fees

 

  Strong deposit growth supported related investment portfolio and cash balance strategies to optimize asset sensitivity going into 2022. While dilutive to NIM, this was a net benefit to net interest income. This elevated liquidity drove NIM to decline 6 basis points while lower Paycheck Protection Program “PPP” loan fees accounted for 6 basis points decline

 

  Net charge-off ratio of 0.17% in 4Q21 compared with 0.20% in 3Q21 and 0.58% in 4Q20

 

  Average total loans grew 2.0% on a linked quarter basis

                       

 

  Full year net income of $7,963 million and diluted earnings per common share of $5.10

 

  Full year average earning assets growth of 5.1%

 

  Full year average total deposits growth of 8.9%

 

  CET1 capital ratio increased to 10.0% at December 31, 2021, compared with 9.7% at December 31, 2020

 

 

CEO Commentary

 

“The value of our diversified business model was evident in 2021 results. Credit quality continues to be particularly strong with our net charge-off ratio at a historical low of 17 basis points in the fourth quarter. We experienced solid loan growth from new business originations and increased line utilization. Deposit growth was very strong this quarter increasing $18.4 billion or 4.3% compared with the third quarter, which supported our loan growth and provided the opportunity for investment strategies that were both accretive to fourth quarter net interest income and maintains asset sensitivity for future growth in a rising rate environment. As we start a new year, we are encouraged by the momentum building in each of our lines of business. The investments we have made in our digital transformation and payments ecosystem initiatives will continue to enable customer and revenue growth and we expect continued momentum in customer spend activity and loan growth. In the fourth quarter we closed on the acquisition of TravelBank, providing tech-led expense and travel management solutions for mid-size companies, and the PFM acquisition, which increases assets under management. I want to thank our U.S. Bank employees for all they do, and we are looking forward to welcoming Union Bank employees to our team when we close on the acquisition later this year.”

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

 

In the Spotlight

 

U.S. Bank Helping Customers Manage Cash Flow

In 2022, U.S. Bank is implementing changes to help consumer customers better manage their cash flow and avoid fees. Effective January 3, U.S. Bank eliminated certain fees for non-sufficient funds. By the end of the second quarter, the amount an account can be overdrawn prior to fee assessment will increase from $5 to $50. A new U.S. Bank Overdraft Fee Forgiven offering provides account holders a full day to deposit funds to avoid a fee when the negative balance is more than $50. Additionally, the bank will roll out a new balance dashboard providing smart alerts to inform consumers of a potential negative balance before it occurs.

U.S. Bank Acquires PFM Asset Management

U.S. Bank closed on its previously announced agreement to purchase PFM Asset Management LLC. As part of the acquisition, more than 250 PFM Asset Management employees have joined U.S. Bank. With the addition of PFMAM, Wealth Management and Investment Services has combined investment assets under management of approximately $420 billion as of December 31, 2021.

U.S. Bank Acquires TravelBank

U.S. Bancorp, the parent company of U.S. Bank, has acquired TravelBank, a San Francisco-based fintech company that provides an all-in-one, tech-driven expense and travel management solution. TravelBank is easy to use for employees and helps businesses control and track expenses, automate processes, streamline approvals and reporting and ensure compliance with company policies.

Net Zero Greenhouse Gas Emissions Goal

U.S. Bank announced several company-wide commitments to address the impacts of climate change on its business, customers and communities, including setting a goal to achieve Net Zero greenhouse gas emissions by 2050. In addition, goals were set to source 100% renewable electricity within its operations by 2025 and an environmental finance goal of $50 billion by 2030.

 

 

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        Investor contact: Jennifer Thompson, 612.303.0778 | Media contact: Jeff Shelman, 612.303.9933


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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

  INCOME STATEMENT HIGHLIGHTS  
  ($ in millions, except per-share data)                         Percent Change                       
     

4Q

2021

    

3Q

2021

    

4Q

2020

    

4Q21 vs

3Q21

    

4Q21 vs 

4Q20 

    

Full Year

2021

    

Full Year

2020

    

Percent

Change

 

Net interest income

     $3,123        $3,171        $3,175        (1.5      (1.6)        $12,494        $12,825        (2.6

Taxable-equivalent adjustment

     27        26        26        3.8        3.8         106        99        7.1  

Net interest income (taxable-equivalent basis)

     3,150        3,197        3,201        (1.5      (1.6)        12,600        12,924        (2.5

Noninterest income

     2,534        2,693        2,550        (5.9      (.6)        10,227        10,401        (1.7

Total net revenue

     5,684        5,890        5,751        (3.5      (1.2)        22,827        23,325        (2.1

Noninterest expense

     3,533        3,429        3,364        3.0        5.0         13,728        13,369        2.7  

Income before provision and income taxes

     2,151        2,461        2,387        (12.6      (9.9)        9,099        9,956        (8.6

Provision for credit losses

     (13      (163      441        92.0        nm         (1,173      3,806        nm  

Income before taxes

     2,164        2,624        1,946        (17.5      11.2         10,272        6,150        67.0  

Income taxes and taxable-equivalent adjustment

     486        590        421        (17.6      15.4         2,287        1,165        96.3  

Net income

     1,678        2,034        1,525        (17.5      10.0         7,985        4,985        60.2  

Net (income) loss attributable to noncontrolling interests

     (5      (6      (6      16.7        16.7         (22      (26      15.4  

Net income attributable to U.S. Bancorp

     $1,673        $2,028        $1,519        (17.5      10.1         $7,963        $4,959        60.6  

Net income applicable to U.S. Bancorp common shareholders

     $1,582        $1,934        $1,425        (18.2      11.0         $7,605        $4,621        64.6  

Diluted earnings per common share

     $1.07        $1.30        $.95        (17.7      12.6         $5.10        $3.06        66.7  
                                                                         

Net income attributable to U.S. Bancorp was $1,673 million for the fourth quarter of 2021, which was $154 million higher than the $1,519 million for the fourth quarter of 2020, and $355 million lower than the $2,028 million for the third quarter of 2021. Diluted earnings per common share were $1.07 in the fourth quarter of 2021, compared with $0.95 in the fourth quarter of 2020 and $1.30 in the third quarter of 2021.

The increase in net income year-over-year was primarily due to lower provision for credit losses, partially offset by lower net interest income, lower noninterest income, and higher noninterest expense. Net interest income decreased 1.6 percent on a year-over-year taxable-equivalent basis due to lower loan spreads and mix of earning assets, partially offset by higher investment portfolio balances and the benefit of deposit and funding mix. The net interest margin declined from 2.57 percent a year ago to 2.40 percent in the fourth quarter of 2021 primarily due to the mix of loans, lower loan spreads and higher investment portfolio balances, partially offset by the net benefit of funding composition. Noninterest income decreased 0.6 percent compared with a year ago primarily reflecting lower mortgage banking revenue, other noninterest income, and securities gains, mostly offset by improvements in payments revenue, trust and investment management fees, deposit service charges, and commercial products revenue. Noninterest expense increased 5.0 percent reflecting increases in compensation expense, primarily related to performance-based incentive compensation, as well as higher employee benefits expense, professional services expense and marketing and business development expense, partially offset by lower other noninterest expense.

Net income decreased on a linked quarter basis primarily due to lower net interest income, mainly due to lower loan fees related to the SBA Paycheck Protection Program, and lower noninterest income, primarily due to seasonally lower payments and capital markets revenues and lower mortgage banking revenue as refinancing continued to decline. In addition, noninterest expense increased and the provision for credit losses was higher due to reductions in the allowance for credit losses in the third quarter of 2021. Net interest income on a taxable-equivalent basis decreased 1.5 percent primarily due to the impact of loan forgiveness related to the Paycheck Protection Program (“PPP”), earning asset mix and lower loan yields, partially offset by strong growth in average loan balances. The net interest margin declined 13 basis points from 2.53 percent on a linked quarter basis primarily reflecting lower PPP loan fees as well as the impact of strong deposit flows and related investment and cash balance strategies. Noninterest income decreased 5.9 percent compared with the third quarter of 2021 driven by seasonally lower payments and capital markets revenues and lower mortgage banking revenue, partially offset by improvements in trust and investment management fees. Noninterest expense increased 3.0 percent on a linked quarter basis reflecting higher employee benefits expense, professional services expense, marketing and business development expense and amortization of tax-advantaged investments.

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

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

4Q

2021

    

3Q

2021

    

4Q

2020

    

4Q21 vs

3Q21

    

4Q21 vs

4Q20

    

Full Year

2021

    

Full Year

2020

     Change  

Components of net interest income

                       

Income on earning assets

     $3,382         $3,435         $3,505         $(53)         $(123)         $13,593         $14,942         $(1,349)   

Expense on interest-bearing liabilities

     232         238         304         (6)         (72)         993         2,018         (1,025)   

Net interest income

     $3,150         $3,197         $3,201         $(47)         $(51)         $12,600         $12,924         $(324)   

Average yields and rates paid

                       

Earning assets yield

     2.58%         2.72%         2.81%         (.14)%         (.23)%         2.69%         3.10%         (.41)%   

Rate paid on interest-bearing liabilities

     .25            .27            .33            (.02)            (.08)            .28            .56            (.28)      

Gross interest margin

     2.33%         2.45%         2.48%         (.12)%         (.15)%         2.41%         2.54%         (.13)%   

Net interest margin

     2.40%         2.53%         2.57%         (.13)%         (.17)%         2.49%         2.68%         (.19)%   

Average balances

                       

Investment securities (a)

     $160,784         $151,755         $133,430         $9,029         $27,354         $154,702         $125,954         $28,748   

Loans

     302,755         296,739         302,308         6,016         447         296,965         307,269         (10,304)   

Earning assets

     522,535         503,325         497,437         19,210         25,098         506,141         481,402         24,739   

Interest-bearing liabilities

     363,880         353,129         362,445         10,751         1,435         358,533         363,298         (4,765)   
(a) Excludes unrealized gain (loss)                        

 

 

 

Net interest income on a taxable-equivalent basis in the fourth quarter of 2021 was $3,150 million, a decrease of $51 million (1.6 percent) compared with the fourth quarter of 2020. The decrease was primarily due to lower loan spreads and mix of earning assets, partially offset by higher investment portfolio balances and the benefit of deposit and funding mix. Average earning assets were $25.1 billion (5.0 percent) higher than the fourth quarter of 2020, reflecting an increase of $27.4 billion (20.5 percent) in average investment securities and an increase of $447 million (0.1 percent) in average total loans while average other earning assets decreased $673 million (1.3 percent) due to lower cash balances.

Net interest income on a taxable-equivalent basis decreased $47 million (1.5 percent) on a linked quarter basis primarily due to lower interest and loan fees of approximately $82 million related to the SBA Paycheck Protection Program. Average earning assets were $19.2 billion (3.8 percent) higher on a linked quarter basis, reflecting increases of $9.0 billion (5.9 percent) in average investment securities, $6.0 billion (2.0 percent) in average loans and $4.8 billion (10.0 percent) in average other earning assets, driven by higher average cash balances.

The net interest margin in the fourth quarter of 2021 was 2.40 percent, compared with 2.57 percent in the fourth quarter of 2020 and 2.53 percent in the third quarter of 2021. The decrease in the net interest margin from the prior year was primarily due to the mix of loans, lower loan spreads and higher investment portfolio balances, partially offset by the net benefit of funding composition. The decrease in interest margin on a linked quarter basis reflected lower loan fees related to the SBA Paycheck Protection Program, as well as the impact of strong deposit flows and related investment and cash balances strategies.

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

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

AVERAGE LOANS  
($ in millions)                         Percent Change                      
     

4Q

2021

    

3Q

2021

    

4Q

2020

    

4Q21 vs

3Q21

   

4Q21 vs

4Q20

   

Full Year

2021

    

Full Year

2020

    

Percent

Change

 

Commercial

     $99,433         $96,673         $100,863         2.9       (1.4)       $97,649         $108,367         (9.9)  

Lease financing

     5,075         5,159         5,558         (1.6     (8.7     5,206         5,600         (7.0)  

Total commercial

     104,508         101,832         106,421         2.6       (1.8     102,855         113,967         (9.8)  

Commercial mortgages

     28,216         28,080         29,004         .5       (2.7     27,997         29,641         (5.5)  

Construction and development

     10,635         10,841         11,094         (1.9     (4.1     10,784         10,907         (1.1)  

Total commercial real estate

     38,851         38,921         40,098         (.2     (3.1     38,781         40,548         (4.4)  

Residential mortgages

     75,858         74,104         76,809         2.4       (1.2     74,629         73,667         1.3  

Credit card

     22,399         21,905         21,937         2.3       2.1       21,645         22,332         (3.1)  

Retail leasing

     7,354         7,643         8,299         (3.8     (11.4     7,710         8,405         (8.3)  

Home equity and second mortgages

     10,568         10,936         12,816         (3.4     (17.5     11,228         13,894         (19.2)  

Other

     43,217         41,398         35,928         4.4       20.3       40,117         34,456         16.4  

Total other retail

     61,139         59,977         57,043         1.9       7.2       59,055         56,755         4.1  

Total loans

     $302,755         $296,739         $302,308         2.0       .1       $296,965         $307,269         (3.4)  

 

 

 

Average total loans for the fourth quarter of 2021 were $447 million (0.1 percent) higher than the fourth quarter of 2020. The increase was primarily due to growth in credit card balances (2.1 percent) and other retail loans (20.3 percent) offset by lower total commercial loans (1.8 percent) and total commercial real estate (3.1 percent) and residential mortgages (1.2 percent). The strong growth in other retail was driven by auto and recreational vehicle lending, offset by declining home equity and second mortgages (17.5 percent). The decrease in total commercial loans (1.8 percent) was driven by expected forgiveness of SBA Paycheck Protection Program loans and lower total commercial real estate loans (3.1 percent) was a result of paydowns.

Average total loans were $6.0 billion (2.0 percent) higher than the third quarter of 2021 primarily due to higher total commercial loans (2.6 percent) driven by strong new business and higher utilization, higher credit card balances (2.3 percent), growth in residential mortgages (2.4 percent) due to increased loan portfolio production and slower payoffs in the mortgage portfolio, and higher other retail loans (4.4 percent) driven by growth in installment loans.

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

 AVERAGE DEPOSITS                                                
 ($ in millions)                         Percent Change                        
     4Q       3Q       4Q       4Q21 vs     4Q21 vs     Full Year       Full Year       Percent  
      2021       2021       2020       3Q21     4Q20     2021       2020       Change  

Noninterest-bearing deposits

   $ 135,936       $ 129,018       $ 115,148         5.4       18.1     $ 127,204       $ 98,539         29.1  

Interest-bearing savings deposits

                     

Interest checking

     108,889         103,036         91,384         5.7       19.2       103,198         84,276         22.5  

Money market savings

     117,462         112,543         127,390         4.4       (7.8     117,093         125,786         (6.9

Savings accounts

     64,763         63,387         55,730         2.2       16.2       62,294         52,142         19.5  

Total savings deposits

     291,114         278,966         274,504         4.4       6.1       282,585         262,204         7.8  

Time deposits

     22,788         23,503         32,761         (3.0     (30.4     24,492         37,872         (35.3

Total interest-bearing deposits

     313,902         302,469         307,265         3.8       2.2       307,077         300,076         2.3  

Total deposits

   $ 449,838       $ 431,487       $ 422,413         4.3       6.5     $ 434,281       $ 398,615         8.9  

 

 

Average total deposits for the fourth quarter of 2021 were $27.4 billion (6.5 percent) higher than the fourth quarter of 2020. Average noninterest-bearing deposits increased $20.8 billion (18.1 percent) primarily within Corporate and Commercial Banking and Wealth Management and Investment Services, partially offset by a decrease in Payments Services. Average total savings deposits were $16.6 billion (6.1 percent) higher year-over-year driven by Consumer and Business Banking, partially offset by a decrease in Wealth Management and Investment Services. Average time deposits were $10.0 billion (30.4 percent) lower than the prior year within Corporate and Commercial Banking, Consumer and Business Banking and Wealth Management and Investment Services. Changes in time deposits are primarily related to those deposits managed as an alternative to other funding sources, based largely on relative pricing and liquidity characteristics.

Average total deposits experienced strong growth of $18.4 billion (4.3 percent) from the third quarter of 2021. On a linked quarter basis, average noninterest-bearing deposits increased $6.9 billion (5.4 percent) driven by Wealth Management and Investment Services and Corporate and Commercial Banking. Average total savings deposits increased $12.1 billion (4.4 percent) compared with the third quarter of 2021 driven by increases in Corporate and Commercial Banking, Consumer and Business Banking and Wealth Management and Investment Services. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, were $715 million (3.0 percent) lower on a linked quarter basis, with decreases across most business lines.

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

NONINTEREST INCOME                                                 
($ in millions)                         Percent Change                         
     4Q      3Q      4Q      4Q21 vs     4Q21 vs      Full Year      Full Year      Percent  
      2021      2021      2020      3Q21     4Q20      2021      2020      Change  

Credit and debit card revenue

     $382         $393         $362         (2.8)       5.5        $1,507         $1,338         12.6  

Corporate payment products revenue

     155         156         126         (.6     23.0        575         497         15.7  

Merchant processing services

     365         392         311         (6.9     17.4        1,449         1,261         14.9  

Trust and investment management fees

     483         459         441         5.2       9.5        1,832         1,736         5.5  

Deposit service charges

     193         194         165         (.5     17.0        724         677         6.9  

Treasury management fees

     152         155         143         (1.9     6.3        614         568         8.1  

Commercial products revenue

     265         277         239         (4.3     10.9        1,102         1,143         (3.6

Mortgage banking revenue

     298         418         468         (28.7     (36.3      1,361         2,064         (34.1

Investment products fees

     62         62         50         --       24.0        239         192         24.5  

Securities gains (losses), net

     15         20         34         (25.0     (55.9      103         177         (41.8

Other

     164         167         211         (1.8     (22.3      721         748         (3.6

Total noninterest income

   $ 2,534       $ 2,693       $ 2,550         (5.9     (.6    $ 10,227       $ 10,401         (1.7

 

 

Fourth quarter noninterest income of $2,534 million was $16 million (0.6 percent) lower than the fourth quarter of 2020 reflecting strong growth in payments revenue, trust and investment management fees, deposit service charges, and commercial products revenue that was more than offset by lower mortgage banking revenue, other noninterest income and securities gains. Mortgage banking revenue decreased $170 million (36.3 percent) compared with the fourth quarter of 2020 due to lower mortgage production volume, given declining refinancing activity, 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. Other noninterest income decreased $47 million (22.3 percent) driven by lower tax-advantaged investment syndication revenue in the fourth quarter of 2021 and the impact of favorable asset gains and the transition services agreement revenue associated with the sale of the Company’s ATM third-party servicing business in the fourth quarter of 2020. Several fee categories had strong growth from a year ago. Payment services revenue increased $103 million (12.9 percent) compared with the fourth quarter of 2020 as credit and debit card revenue increased $20 million (5.5 percent) due to higher net interchange revenue related to sales volumes as well as stronger fee activity. Corporate payment products revenue increased $29 million (23.0 percent) primarily due to higher sales volume. Merchant processing services revenue increased $54 million (17.4 percent) driven by higher sales volumes and merchant fees. Trust and investment management fees increased $42 million (9.5 percent) driven by business growth, favorable market conditions and activity related to the acquisition of PFM Asset Management LLC (“PFM”), partially offset by higher fee waivers. Deposit service charges increased $28 million (17.0 percent) primarily due to the impact of customer remediations in 2020 as well as higher customer activity in the fourth quarter of 2021. Commercial products revenue increased $26 million (10.9 percent) primarily due to higher capital markets and foreign currency customer activity as well as higher trading revenue, partially offset by lower commercial leasing fees.

Noninterest income was $159 million (5.9 percent) lower in the fourth quarter of 2021 compared with the third quarter of 2021 reflecting seasonally lower payments and capital markets revenues and declining mortgage banking revenue. Payment services revenue decreased $39 million (4.1 percent) compared with the third quarter of 2021 as credit and debit card revenue decreased $11 million (2.8 percent) due to lower net interchange rate, net of higher volume and merchant processing services decreased $27 million (6.9 percent) primarily driven by lower rate and sales volume in sectors that continue to be negatively impacted by the pandemic. Mortgage banking revenue decreased $120 million (28.7 percent) driven by lower production volume and related gain on sale margins and the slightly unfavorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities. Partially offsetting these decreases, trust and investment management fees increased $24 million (5.2 percent) driven by favorable market conditions, business growth and activity related to the acquisition of PFM.

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

 NONINTEREST EXPENSE                                                              
 ($ in millions)                         Percent Change                      
     

4Q

2021

    

3Q

2021

    

4Q

2020

    

4Q21 vs

3Q21

   

4Q21 vs

4Q20

   

Full Year

2021

    

Full Year

2020

     Percent
Change
 

Compensation

   $ 1,851       $ 1,847       $ 1,643         .2       12.7       $7,299         $6,635         10.0  

Employee benefits

     372         336         302         10.7       23.2       1,429         1,303         9.7  

Net occupancy and equipment

     268         259         269         3.5       (.4     1,048         1,092         (4.0

Professional services

     160         126         123         27.0       30.1       492         430         14.4  

Marketing and business development

     129         99         105         30.3       22.9       366         318         15.1  

Technology and communications

     372         361         362         3.0       2.8       1,454         1,294         12.4  

Postage, printing and supplies

     71         69         74         2.9       (4.1     274         288         (4.9

Other intangibles

     40         41         47         (2.4     (14.9     159         176         (9.7

Other

     270         291         439         (7.2     (38.5     1,207         1,833         (34.2

Total noninterest expense

   $ 3,533       $ 3,429       $ 3,364         3.0       5.0     $ 13,728       $ 13,369         2.7  
                                                                       

Fourth quarter noninterest expense of $3,533 million was $169 million (5.0 percent) higher than the fourth quarter of 2020 reflecting increases in compensation expense, employee benefits expense, professional services expense, and marketing and business development, partially offset by lower other noninterest expense. Compensation expense increased $208 million (12.7 percent) compared with the fourth quarter of 2020 primarily due to performance-based incentives, revenue related commissions, merit, and hiring to support business growth. Employee benefits increased $70 million (23.2 percent) driven by higher medical claims expense and compensation related payroll taxes in the fourth quarter of 2021. Professional services expense increased $37 million (30.1 percent) primarily due to an increase in business investment and related initiatives. Marketing and business development expense increased $24 million (22.9 percent) due to the timing of marketing campaigns and increased travel and entertainment. These increases were partially offset by lower other noninterest expense of $169 million (38.5 percent) due to COVID-19 related accruals in the fourth quarter of 2020, including recognizing liabilities related to future delivery exposures for merchant and airline processing and other accruals.

Noninterest expense increased $104 million (3.0 percent) on a linked quarter basis reflecting increases in employee benefits expense, professional services expense and marketing and business development, partially offset by lower other noninterest expense. Employee benefits expense increased $36 million (10.7 percent) driven by higher medical claims expense. Professional services expense increased $34 million (27.0 percent) primarily due to an increase in business investment and related initiatives. Marketing and business development expense increased $30 million (30.3 percent) due to the timing of marketing campaigns. Partially offsetting these increases, other noninterest expense decreased $21 million (7.2 percent) primarily due to lower accruals related to future delivery exposures for merchant and airline processing and other accruals, partially offset by seasonally higher amortization of tax-advantaged investments, which were scaled back in 2020 due to the economic environment driven by the pandemic conditions.

Provision for Income Taxes

The provision for income taxes for the fourth quarter of 2021 resulted in a tax rate of 22.5 percent on a taxable-equivalent basis (effective tax rate of 21.5 percent), compared with 21.6 percent on a taxable-equivalent basis (effective tax rate of 20.6 percent) in the fourth quarter of 2020, and a tax rate of 22.5 percent on a taxable-equivalent basis (effective tax rate of 21.7 percent) in the third quarter of 2021.

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

 ALLOWANCE FOR CREDIT LOSSES  
 ($ in millions)  

4Q

2021

    % (a)    

3Q

2021

    % (a)    

2Q

2021

    % (a)    

1Q

2021

    % (a)    

4Q

2020

    % (a)  

Balance, beginning of period

  $ 6,300       $ 6,610       $ 6,960       $ 8,010       $ 8,010    

Net charge-offs

                   

Commercial

    6       .02       13       .05       26       .11       52       .22       142       .56  

Lease financing

    --        --        1       .08       1       .08       4       .30       8       .57  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total commercial

    6       .02       14       .05       27       .11       56       .22       150       .56  

Commercial mortgages

    (3     (.04     1       .01       --        --        (12     (.17     82       1.12  

Construction and development

    (1     (.04     12       .44       --        --        5       .19       2       .07  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total commercial real estate

    (4     (.04     13       .13       --        --        (7     (.07     84       .83  

Residential mortgages

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

Credit card

    109       1.93       111       2.01       148       2.81       144       2.76       165       2.99  

Retail leasing

    1       .05       1       .05       (1     (.05     1       .05       9       .43  

Home equity and second mortgages

    (2     (.08     (3     (.11     (3     (.11     (2     (.07     (3     (.09

Other

    29       .27       21       .20       19       .20       36       .40       43       .48  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total other retail

    28       .18       19       .13       15       .10       35       .25       49       .34  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total net charge-offs

    132       .17       147       .20       180       .25       223       .31       441       .58  

Provision for credit losses

    (13       (163       (170       (827       441    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Balance, end of period

  $ 6,155       $ 6,300       $ 6,610       $ 6,960       $ 8,010    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Components

                   

Allowance for loan losses

  $ 5,724       $ 5,792       $ 6,026       $ 6,343       $ 7,314    

Liability for unfunded credit commitments

    431         508         584         617         696    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Total allowance for credit losses

  $ 6,155       $ 6,300       $ 6,610       $ 6,960       $ 8,010    
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Gross charge-offs

  $ 254       $ 266       $ 314       $ 374       $ 556    

Gross recoveries

  $ 122       $ 119       $ 134       $ 151       $ 115    

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

    1.97         2.12         2.23         2.36         2.69    

Nonperforming loans

    738         695         649         617         654    

Nonperforming assets

    701         667         624         579         617    

(a)  Annualized and calculated on average loan balances

   

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

The Company’s provision for credit losses for the fourth quarter of 2021 was a benefit of $13 million, which was $150 million higher than the prior quarter and $454 million lower than the fourth quarter of 2020. During 2021, factors affecting economic conditions, including passing of additional government stimulus and widespread vaccine availability in the U.S., have contributed to economic improvement. However, economic uncertainty remains associated with supply chain concerns, rising inflationary concerns and additional virus variants. In addition to these factors, expected loss estimates consider various factors including customer specific information impacting changes in risk ratings, projected delinquencies and potential effects of diminishing liquidity without the support of mortgage forbearance and direct federal stimulus. Currently, consumer credit trends continue to perform better than expected, while select wholesale portfolios continue to be monitored for pandemic related impacts.

Total net charge-offs in the fourth quarter of 2021 were $132 million, compared with $147 million in the third quarter of 2021 and $441 million in the fourth quarter of 2020. The net charge-off ratio was 0.17 percent in the fourth quarter of 2021, compared with 0.20 percent in the third quarter of 2021 and 0.58 percent in the fourth quarter of 2020. Net charge-offs decreased $15 million (10.2 percent) compared with the third quarter of 2021 associated with borrower liquidity and strong asset prices in the market that support repayment and recovery on problem loans. Net charge-offs decreased $309 million (70.1 percent) compared with the fourth quarter of 2020 reflecting improvement across all loan categories.

The allowance for credit losses was $6,155 million at December 31, 2021, compared with $6,300 million at September 30, 2021, and $8,010 million at December 31, 2020. The decrease on a linked quarter basis was driven by continued strong credit quality and collateral performance, partially offset by loan growth. Economic re-openings associated with vaccine availability improved performance and contributed to lower reserve levels. The ratio of the allowance for credit losses to period-end loans was 1.97 percent at December 31, 2021, compared with 2.12 percent at September 30, 2021, and 2.69 percent at December 31, 2020. The ratio of the allowance for credit losses to nonperforming loans was 738 percent at December 31, 2021, compared with 695 percent at September 30, 2021, and 654 percent at December 31, 2020.

Nonperforming assets were $878 million at December 31, 2021, compared with $944 million at September 30, 2021, and $1,298 million at December 31, 2020. The ratio of nonperforming assets to loans and other real estate was 0.28 percent at December 31, 2021, compared with 0.32 percent at September 30, 2021, and 0.44 percent at December 31, 2020. The year-over-year and linked quarter decrease in nonperforming assets was primarily due to decreases in total commercial nonperforming loans and commercial mortgage nonperforming loans. Accruing loans 90 days or more past due were $472 million at December 31, 2021, compared with $385 million at September 30, 2021, and $477 million at December 31, 2020. The Company expects credit quality to return to more normalized levels over time. 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 Fourth Quarter 2021 Results
      

 

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

Dec 31

2021

    

Sep 30

2021

    

Jun 30

2021

    

Mar 31

2021

    

Dec 31

2020

 

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

 

     

Commercial

     .04        .04        .04        .06        .05  

Commercial real estate

     .03        .05        .01        .01        .01  

Residential mortgages

     .24        .15        .16        .19        .18  

Credit card

     .73        .66        .70        .95        .88  

Other retail

     .11        .11        .10        .12        .15  

Total loans

     .15        .13        .13        .16        .16  

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

 

     

Commercial

     .20        .25        .32        .39        .42  

Commercial real estate

     .76        .82        .81        .94        1.15  

Residential mortgages

     .53        .47        .49        .54        .50  

Credit card

     .73        .66        .70        .95        .88  

Other retail

     .35        .36        .39        .42        .42  

Total loans

     .42        .43        .47        .54        .57  
                                              

 

ASSET QUALITY (a)  
($ in millions)                                   
     

Dec 31

2021

    

Sep 30

2021

    

Jun 30

2021

    

Mar 31

2021

    

Dec 31

2020

 

Nonperforming loans

              

Commercial

     $139         $179         $247         $298         $321   

Lease financing

     35         37         44        49         54   

Total commercial

     174         216         291         347         375   

Commercial mortgages

     213         215         224         266         411    

Construction and development

     71         81         88         90         39   

Total commercial real estate

     284         296         312         356         450   

Residential mortgages

     226         237         244         253         245   

Credit card

     --         --         --         --         --   

Other retail

     150         157         171         172         154   

Total nonperforming loans

     834         906         1,018         1,128         1,224   

Other real estate

     22         17         17         19         24   

Other nonperforming assets

     22         21         24         55         50   

Total nonperforming assets

     $878         $944         $1,059         $1,202         $1,298   

Accruing loans 90 days or more past due

     $472         $385         $376         $476         $477   

Nonperforming assets to loans plus ORE (%)

     .28         .32         .36         .41         .44   

(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 Fourth Quarter 2021 Results
      

 

COMMON SHARES  
(Millions)   

4Q

2021

    

3Q

2021

    

2Q

2021

    

1Q

2021

    

4Q

2020

 

Beginning shares outstanding

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

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

            --                        

Shares repurchased

     --         --         (15      (13      --   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ending shares outstanding

     1,484         1,483         1,483         1,497         1,507   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
                                              

 

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

Total U.S. Bancorp shareholders’ equity

   $ 54,918      $ 53,743      $ 53,039      $ 51,678      $ 53,095   

Basel III Standardized Approach (a)

                                  

Common equity tier 1 capital

   $ 41,701      $ 41,014      $ 39,691      $ 39,103      $ 38,045   

Tier 1 capital

     48,516        47,426        46,103        45,517        44,474   

Total risk-based capital

     56,250        54,178        53,625        53,625        52,602   

Common equity tier 1 capital ratio

     10.0      10.2      9.9      9.9      9.7 

Tier 1 capital ratio

     11.6        11.7        11.5        11.5        11.3   

Total risk-based capital ratio

     13.4        13.4        13.4        13.5        13.4   

Leverage ratio

     8.6        8.7        8.5        8.4        8.3   

Tangible common equity to tangible assets (b)

     6.8        6.8        6.8        6.6        6.9   

Tangible common equity to risk-weighted assets (b)

     9.2        9.4        9.3        9.1        9.5   

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

     9.6        9.7        9.5        9.5        9.3   

(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 $54.9 billion at December 31, 2021, compared with $53.7 billion at September 30, 2021, and $53.1 billion at December 31, 2020. The Company suspended all common stock repurchases at the beginning of the third quarter of 2021, except for those done exclusively in connection with its stock-based compensation programs, due to its recently announced acquisition of MUFG Union Bank’s core regional banking franchise. The Company does not expect to commence repurchasing its common stock again until after the acquisition closes in order to build capital prior to the acquisition. The Company expects to operate at a CET1 capital ratio between our target ratio and 9.0 percent after closing of the acquisition.

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 10.0 percent at December 31, 2021, compared with 10.2 percent at September 30, 2021, and 9.7 percent at December 31, 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 9.6 percent at December 31, 2021, compared with 9.7 percent at September 30, 2021, and 9.3 percent at December 31, 2020.

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

  Investor Conference Call

On Wednesday, January 19, 2022 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 7876125. For those unable to participate during the live call, a recording will be available at approximately 11 a.m. CT on Wednesday, January 19, 2022 and will be accessible until Wednesday, January 26,2022 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 7876125.

 

 

  About U.S. Bancorp

U.S. Bancorp, with nearly 70,000 employees and $573 billion in assets as of December 31, 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. In addition, U.S. Bancorp’s proposed acquisition of MUFG Union Bank presents risks and uncertainties, including, among others: the risk that the cost savings, any revenue synergies and other anticipated benefits of the proposed acquisition may not be realized or may take longer than anticipated to be realized; the risk that U.S. Bancorp’s business could be disrupted as a result of the announcement and pendency of the proposed acquisition and diversion of management’s attention from ongoing business operations and opportunities; the possibility that the proposed acquisition, including the integration of MUFG Union Bank, may be more costly or difficult to complete than anticipated; delays in closing the proposed acquisition; and the failure of required governmental approvals to be obtained or any other closing conditions in the definitive purchase agreement to be satisfied.

 

 

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   U.S. Bancorp Fourth Quarter 2021 Results
      

 

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.

 

 

  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     
December 31,
   

    Year Ended    

    December 31,

 
(Unaudited)    2021     2020     2021     2020  

Interest Income

        

Loans

     $2,635       $2,866       $10,747       $12,018  

Loans held for sale

     56       59       232       216  

Investment securities

     624       520       2,365       2,428  

Other interest income

     40       34       143       178  

Total interest income

     3,355       3,479       13,487       14,840  

Interest Expense

        

Deposits

     75       101       320       950  

Short-term borrowings

     18       17       70       141  

Long-term debt

     139       186       603       924  

Total interest expense

     232       304       993       2,015  

Net interest income

     3,123       3,175       12,494       12,825  

Provision for credit losses

     (13     441       (1,173     3,806  

Net interest income after provision for credit losses

     3,136       2,734       13,667       9,019  

Noninterest Income

        

Credit and debit card revenue

     382       362       1,507       1,338  

Corporate payment products revenue

     155       126       575       497  

Merchant processing services

     365       311       1,449       1,261  

Trust and investment management fees

     483       441       1,832       1,736  

Deposit service charges

     193       165       724       677  

Treasury management fees

     152       143       614       568  

Commercial products revenue

     265       239       1,102       1,143  

Mortgage banking revenue

     298       468       1,361       2,064  

Investment products fees

     62       50       239       192  

Securities gains (losses), net

     15       34       103       177  

Other

     164       211       721       748  

Total noninterest income

     2,534       2,550       10,227       10,401  

Noninterest Expense

        

Compensation

     1,851       1,643       7,299       6,635  

Employee benefits

     372       302       1,429       1,303  

Net occupancy and equipment

     268       269       1,048       1,092  

Professional services

     160       123       492       430  

Marketing and business development

     129       105       366       318  

Technology and communications

     372       362       1,454       1,294  

Postage, printing and supplies

     71       74       274       288  

Other intangibles

     40       47       159       176  

Other

     270       439       1,207       1,833  

Total noninterest expense

     3,533       3,364       13,728       13,369  

Income before income taxes

     2,137       1,920       10,166       6,051  

Applicable income taxes

     459       395       2,181       1,066  

Net income

     1,678       1,525       7,985       4,985  

Net (income) loss attributable to noncontrolling interests

     (5     (6     (22     (26

Net income attributable to U.S. Bancorp

     $1,673       $1,519       $7,963       $4,959  

Net income applicable to U.S. Bancorp common shareholders

     $1,582       $1,425       $7,605       $4,621  

Earnings per common share

     $1.07       $.95       $5.11       $3.06  

Diluted earnings per common share

     $1.07       $.95       $5.10       $3.06  

Dividends declared per common share

     $.46       $.42       $1.76       $1.68  

Average common shares outstanding

     1,483       1,507       1,489       1,509  

Average diluted common shares outstanding

     1,484       1,508       1,490       1,510  

 

 

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 CONSOLIDATED ENDING BALANCE SHEET

 

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

Assets

    

Cash and due from banks

     $28,905       $62,580  

Investment securities

    

Held-to-maturity

     41,858       --  

Available-for-sale

     132,963       136,840  

Loans held for sale

     7,775       8,761  

Loans

    

Commercial

     112,023       102,871  

Commercial real estate

     39,053       39,311  

Residential mortgages

     76,493       76,155  

Credit card

     22,500       22,346  

Other retail

     61,959       57,024  

Total loans

     312,028       297,707  

Less allowance for loan losses

     (5,724     (7,314

Net loans

     306,304       290,393  

Premises and equipment

     3,305       3,468  

Goodwill

     10,262       9,918  

Other intangible assets

     3,738       2,864  

Other assets

     38,174       39,081  

Total assets

     $573,284       $553,905  

Liabilities and Shareholders’ Equity

    

Deposits

    

Noninterest-bearing

     $134,901       $118,089  

Interest-bearing

     321,182       311,681  

Total deposits

     456,083       429,770  

Short-term borrowings

     11,796       11,766  

Long-term debt

     32,125       41,297  

Other liabilities

     17,893       17,347  

Total liabilities

     517,897       500,180  

Shareholders’ equity

    

Preferred stock

     6,371       5,983  

Common stock

     21       21  

Capital surplus

     8,539       8,511  

Retained earnings

     69,201       64,188  

Less treasury stock

     (27,271     (25,930

Accumulated other comprehensive income (loss)

     (1,943     322  

Total U.S. Bancorp shareholders’ equity

     54,918       53,095  

Noncontrolling interests

     469       630  

Total equity

     55,387       53,725  

Total liabilities and equity

     $573,284       $553,905  

 

 

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 NON-GAAP FINANCIAL MEASURES

 

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

Total equity

     $55,387       $54,378       $53,674       $52,308       $53,725  

Preferred stock

     (6,371     (5,968     (5,968     (5,968     (5,983

Noncontrolling interests

     (469     (635     (635     (630     (630

Goodwill (net of deferred tax liability) (1)

     (9,323     (9,063     (8,987     (8,992     (9,014

Intangible assets, other than mortgage servicing rights

     (785     (618     (650     (675     (654

Tangible common equity (a)

     38,439       38,094       37,434       36,043       37,444  

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

     41,701       41,014       39,691       39,103       38,045  

Adjustments (2)

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

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

     39,968       39,281       37,959       37,371       36,312  

Total assets

     573,284       567,495       558,886       553,375       553,905  

Goodwill (net of deferred tax liability) (1)

     (9,323     (9,063     (8,987     (8,992     (9,014

Intangible assets, other than mortgage servicing rights

     (785     (618     (650     (675     (654

Tangible assets (c)

     563,176       557,814       549,249       543,708       544,237  

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

     418,571     404,021       401,301       396,351       393,648  

Adjustments (3)

     (357 )*      (684     (1,027     (1,440     (1,471

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

     418,214     403,337       400,274       394,911       392,177  

Ratios*

          

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

     6.8       6.8       6.8       6.6       6.9  

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

     9.2       9.4       9.3       9.1       9.5  

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

     9.6       9.7       9.5       9.5       9.3  
          
          
     Three Months Ended  
     December 31,
2021
    September 30,
2021
    June 30,
2021
    March 31,
2021
    December 31,
2020
 

Net income applicable to U.S. Bancorp common shareholders

     $1,582       $1,934       $1,914       $2,175       $1,425  

Intangibles amortization (net-of-tax)

     32       32       32       30       37  

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

     1,614       1,966       1,946       2,205       1,462  

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

     6,403       7,800       7,805       8,943       5,816  

Average total equity

     55,875       54,908       53,593       53,359       53,801  

Average preferred stock

     (6,865     (5,968     (5,968     (6,213     (6,217

Average noncontrolling interests

     (633     (635     (631     (630     (630

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

     (9,115     (9,019     (9,003     (9,010     (9,003

Average intangible assets, other than mortgage servicing rights

     (656     (632     (662     (649     (673

Average tangible common equity (g)

     38,606       38,654       37,329       36,857       37,278  

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

     16.6       20.2       20.9       24.3       15.6  

Net interest income

     $3,123       $3,171       $3,137       $3,063       $3,175  

Taxable-equivalent adjustment (4)

     27       26       27       26       26  

Net interest income, on a taxable-equivalent basis

     3,150       3,197       3,164       3,089       3,201  

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

     3,150       3,197       3,164       3,089       3,201  

Noninterest income

     2,534       2,693       2,619       2,381       2,550  

Less: Securities gains (losses), net

     15       20       43       25       34  

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

     5,669       5,870       5,740       5,445       5,717  

Noninterest expense (i)

     3,533       3,429       3,387       3,379       3,364  

Efficiency ratio (i)/(h)

     62.3     58.4     59.0     62.1     58.8
*

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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 NON-GAAP FINANCIAL MEASURES

 

     Year Ended  
(Dollars in Millions, Unaudited)    December 31,
2021
    December 31,
2020
 

Net income applicable to U.S. Bancorp common shareholders

     $7,605       $4,621  

Intangibles amortization (net-of-tax)

     126       139  

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

     7,731       4,760  

Average total equity

     54,442       52,246  

Average preferred stock

     (6,255     (6,042

Average noncontrolling interests

     (632     (630

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

     (9,037     (8,941

Average intangible assets, other than mortgage servicing rights

     (650     (694

Average tangible common equity (b)

     37,868       35,939  

Return on tangible common equity (a)/(b)

     20.4       13.2  

Net interest income

     $12,494       $12,825  

Taxable-equivalent adjustment (2)

     106       99  

Net interest income, on a taxable-equivalent basis

     12,600       12,924  

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

     12,600       12,924  

Noninterest income

     10,227       10,401  

Less: Securities gains (losses), net

     103       177  

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

     22,724       23,148  

Noninterest expense (d)

     13,728       13,369  

Efficiency ratio (d)/(c)

     60.4       57.8  
(1)

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

(2)

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   

4Q

2021

    

3Q

2021

    

4Q  

2020  

    

4Q21 vs

3Q21

   

4Q21 vs

4Q20

        

Full Year

2021

    

Full Year

2020

   

Percent

Change

 

Corporate and Commercial Banking

     $337        $403        $431          (16.4     (21.8        $1,626        $1,659       (2.0

Consumer and Business Banking

     429        629        621          (31.8     (30.9        2,265        2,368       (4.3

Wealth Management and Investment Services

     202        204        204          (1.0     (1.0        837        941       (11.1

Payment Services

     376        410        286          (8.3     31.5          1,720        1,300       32.3  

Treasury and Corporate Support

     329        382        (23)         (13.9     nm          1,515        (1,309     nm  
   

Consolidated Company

     $1,673        $2,028        $1,519          (17.5     10.1          $7,963        $4,959       60.6  
   

(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                           
     

4Q

2021

    

3Q

2021

    

4Q  

2020  

    

4Q21 vs

3Q21

   

4Q21 vs

4Q20

        

Full Year

2021

    

Full Year

2020

    

Percent

Change

 

Condensed Income Statement

                          

Net interest income (taxable-equivalent basis)

     $728        $718        $788          1.4       (7.6        $2,900        $3,411        (15.0

Noninterest income

     249        253        218          (1.6     14.2          1,035        1,117        (7.3

Securities gains (losses), net

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

Total net revenue

     977        971        1,006          .6       (2.9        3,935        4,528        (13.1

Noninterest expense

     419        419        399          --         5.0          1,678        1,711        (1.9

Other intangibles

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

Total noninterest expense

     419        419        399          --         5.0          1,678        1,711        (1.9

Income before provision and taxes

     558        552        607          1.1       (8.1        2,257        2,817        (19.9

Provision for credit losses

     109        15        32          nm       nm          89        604        (85.3

Income before income taxes

     449        537        575          (16.4     (21.9        2,168        2,213        (2.0

Income taxes and taxable-equivalent adjustment

     112        134        144          (16.4     (22.2        542        554        (2.2

Net income

     337        403        431          (16.4     (21.8        1,626        1,659        (2.0

Net (income) loss attributable to noncontrolling interests

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

Net income attributable to U.S. Bancorp

     $337        $403        $431          (16.4     (21.8        $1,626        $1,659        (2.0
   

Average Balance Sheet Data

                          

Loans

     $106,262        $102,526        $106,154          3.6       .1          $103,208        $115,563        (10.7

Other earning assets

     4,690        4,722        4,141          (.7     13.3          4,537        4,163        9.0  

Goodwill

     1,912        1,650        1,647          15.9       16.1          1,715        1,647        4.1  

Other intangible assets

     4        5        6          (20.0     (33.3        5        6        (16.7

Assets

     118,012        114,724        118,792          2.9       (.7        115,194        128,038        (10.0
   

Noninterest-bearing deposits

     65,450        62,662        53,900          4.4       21.4          61,272        44,309        38.3  

Interest-bearing deposits

     75,243        68,821        81,144          9.3       (7.3        71,246        88,138        (19.2

Total deposits

     140,693        131,483        135,044          7.0       4.2          132,518        132,447        .1  
   

Total U.S. Bancorp shareholders’ equity

     13,711        13,780        14,642          (.5     (6.4        13,928        15,063        (7.5
   

(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 $337 million of the Company’s net income in the fourth quarter of 2021, compared with $431 million in the fourth quarter of 2020. Total net revenue was $29 million (2.9 percent) lower due to a decrease of $60 million (7.6 percent) in net interest income, partially offset by an increase of $31 million (14.2 percent) in total noninterest income. Net interest income decreased primarily due to the impact of loan mix and related yields, as well as declining interest rates on the margin benefit from deposits, partially offset by higher deposit balances and favorable deposit mix with higher noninterest-bearing balances. Total noninterest income increased primarily due to higher capital markets, trading revenue and higher foreign currency customer activity, as well as continued stronger treasury management fees due to core growth driven by the economic recovery. Total noninterest expense increased $20 million (5.0 percent) compared with a year ago primarily due to higher production incentives related to capital markets activities and an increase in net shared services expense driven by investment in infrastructure and technology development. The provision for credit losses increased $77 million compared with the fourth quarter of 2020 primarily due to loan loss provisions supporting growth in loan balances in the current year linked quarter, partially offset by improving portfolio credit quality in the current year compared with deteriorating credit quality in the fourth quarter of 2020.

 

 

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

4Q

2021

   

3Q

2021

   

4Q  

2020  

    

4Q21 vs

3Q21

   

4Q21 vs

4Q20

        

Full Year

2021

   

Full Year

2020

    

Percent

Change

 

Condensed Income Statement

                       

Net interest income (taxable-equivalent basis)

     $1,475       $1,550       $1,518          (4.8     (2.8        $6,077       $5,759        5.5  

Noninterest income

     583       715       744          (18.5     (21.6        2,501       3,177        (21.3

Securities gains (losses), net

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

Total net revenue

     2,058       2,265       2,262          (9.1     (9.0        8,578       8,936        (4.0

Noninterest expense

     1,484       1,448       1,408          2.5       5.4          5,690       5,470        4.0  

Other intangibles

     3       3       4          --         (25.0        12       16        (25.0

Total noninterest expense

     1,487       1,451       1,412          2.5       5.3          5,702       5,486        3.9  

Income before provision and taxes

     571       814       850          (29.9     (32.8        2,876       3,450        (16.6

Provision for credit losses

     (1     (25     22          96.0       nm          (144     291        nm  

Income before income taxes

     572       839       828          (31.8     (30.9        3,020       3,159        (4.4

Income taxes and taxable-equivalent adjustment

     143       210       207        (31.9     (30.9        755       791        (4.6

Net income

     429       629       621          (31.8     (30.9        2,265       2,368        (4.3

Net (income) loss attributable to noncontrolling interests

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

Net income attributable to U.S. Bancorp

     $429       $629       $621          (31.8     (30.9        $2,265       $2,368        (4.3
   

Average Balance Sheet Data

                              

Loans

     $140,863       $140,736       $145,169          .1       (3.0        $141,082       $141,259        (.1

Other earning assets

     6,570       7,645       8,954          (14.1     (26.6        8,093       7,175        12.8  

Goodwill

     3,262       3,506       3,475          (7.0     (6.1        3,428       3,500        (2.1

Other intangible assets

     2,966       2,754       2,137          7.7       38.8          2,760       2,105        31.1  

Assets

     159,549       160,785       165,290          (.8     (3.5        161,571       159,191        1.5  
   

Noninterest-bearing deposits

     34,296       34,389       33,608          (.3     2.0          33,855       30,467        11.1  

Interest-bearing deposits

     162,934       160,366       144,973          1.6       12.4          158,434       131,536        20.4  

Total deposits

     197,230       194,755       178,581          1.3       10.4          192,289       162,003        18.7  
   

Total U.S. Bancorp shareholders’ equity

     12,232       12,270       12,570          (.3     (2.7        12,337       12,739        (3.2
   

(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 $429 million of the Company’s net income in the fourth quarter of 2021, compared with $621 million in the fourth quarter of 2020. Total net revenue was lower by $204 million (9.0 percent) due to decreases in net interest income of $43 million (2.8 percent) and total noninterest income of $161 million (21.6 percent). Net interest income reflected lower loan balances and deposit spreads, partially offset by strong growth in deposit balances, favorable deposit mix and favorable loan spreads driven by growth in installment loans and loan mix due in part to a reduction in lower-yielding PPP loans. Total noninterest income decreased primarily due to lower mortgage banking revenue reflecting lower production volume and related gain on sale margins as refinancing activities declined, partially offset by the favorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities. Deposit service charges were stronger due to stronger customer activity in the current year period. Total noninterest expense increased $75 million (5.3 percent) primarily due to increases in net shared services expense due to investments in digital capabilities and higher compensation expense from merit, business growth and revenue-related compensation driven by business production. The provision for credit losses decreased $23 million due to improved credit quality in the current year, partially offset by higher loan loss provisions supporting growth in ending loan balances in the current year linked quarter.

 

 

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WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)  
($ in millions)                         Percent Change                           
     

4Q

2021

    

3Q

2021

    

4Q  

2020  

    

4Q21 vs

3Q21

   

4Q21 vs

4Q20

        

Full Year

2021

    

Full Year

2020

    

Percent

Change

 

Condensed Income Statement

                          

Net interest income (taxable-equivalent basis)

     $255        $237        $282          7.6       (9.6        $1,002        $1,246        (19.6

Noninterest income

     583        558        515          4.5       13.2          2,221        2,022        9.8  

Securities gains (losses), net

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

Total net revenue

     838        795        797          5.4       5.1          3,223        3,268        (1.4

Noninterest expense

     543        508        516          6.9       5.2          2,045        1,961        4.3  

Other intangibles

     4        4        3          --         33.3          14        12        16.7  

Total noninterest expense

     547        512        519          6.8       5.4          2,059        1,973        4.4  

Income before provision and taxes

     291        283        278          2.8       4.7          1,164        1,295        (10.1

Provision for credit losses

     21        11        6          90.9       nm          47        40        17.5  

Income before income taxes

     270        272        272          (.7     (.7        1,117        1,255        (11.0

Income taxes and taxable-equivalent adjustment

     68        68        68          --         --            280        314        (10.8

Net income

     202        204        204          (1.0     (1.0        837        941        (11.1

Net (income) loss attributable to noncontrolling interests

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

Net income attributable to U.S. Bancorp

     $202        $204        $204          (1.0     (1.0        $837        $941        (11.1
   

Average Balance Sheet Data

                          

Loans

     $19,614        $18,456        $16,366          6.3       19.8          $18,097        $15,456        17.1  

Other earning assets

     229        225        292          1.8       (21.6        242        287        (15.7

Goodwill

     1,656        1,618        1,618          2.3       2.3          1,628        1,617        .7  

Other intangible assets

     130        80        34          62.5       nm          84        39        nm  

Assets

     22,895        21,568        19,281          6.2       18.7          21,236        18,564        14.4  
   

Noninterest-bearing deposits

     29,220        24,455        19,700          19.5       48.3          24,587        17,149        43.4  

Interest-bearing deposits

     74,192        71,842        79,873          3.3       (7.1        75,618        77,525        (2.5

Total deposits

     103,412        96,297        99,573          7.4       3.9          100,205        94,674        5.8  
   

Total U.S. Bancorp shareholders’ equity

     3,318        3,172        2,973          4.6       11.6          3,154        2,936        7.4  
   

(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 $202 million of the Company’s net income in the fourth quarter of 2021, compared with $204 million in the fourth quarter of 2020. Total net revenue increased $41 million (5.1 percent) year-over-year reflecting an increase of $68 million (13.2 percent) in noninterest income, partially offset by a decrease of $27 million (9.6 percent) in net interest income. Net interest income decreased year-over-year primarily due to the declining margin benefit of deposits, partially offset by higher noninterest-bearing deposits driving favorable deposit mix, as well as higher average loan balances. Total noninterest income increased primarily due to core business growth in trust and investment management fees and investment products fees both driven by favorable market conditions, partially offset by higher fee waivers related to money market funds. Total noninterest expense increased $28 million (5.4 percent) compared with the fourth quarter of 2020 reflecting higher compensation expense as a result of merit, performance-based incentives related to investment sales volumes and core business growth and an increase in net shared services expense. The provision for credit losses increased $15 million due to increased loan loss provisions supporting stronger balance growth in the current period compared with the prior year quarter.

 

 

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PAYMENT SERVICES (a)          
($ in millions)                         Percent Change                           
     

4Q

2021

    

3Q

2021

    

4Q  

2020  

    

4Q21 vs

3Q21

   

4Q21 vs

4Q20

        

Full Year

2021

    

Full Year

2020

    

Percent

Change

 

Condensed Income Statement

                                 

Net interest income (taxable-equivalent basis)

     $617        $616        $652          .2       (5.4        $2,458        $2,562        (4.1

Noninterest income

     906        946        805          (4.2     12.5          3,550        3,124        13.6  

Securities gains (losses), net

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

Total net revenue

     1,523        1,562        1,457          (2.5     4.5          6,008        5,686        5.7  

Noninterest expense

     855        815        832          4.9       2.8          3,231        3,123        3.5  

Other intangibles

     33        34        40          (2.9     (17.5        133        148        (10.1

Total noninterest expense

     888        849        872          4.6       1.8          3,364        3,271        2.8  

Income before provision and taxes

     635        713        585          (10.9     8.5          2,644        2,415        9.5  

Provision for credit losses

     133        166        204          (19.9     (34.8        349        681        (48.8

Income before income taxes

     502        547        381          (8.2     31.8          2,295        1,734        32.4  

Income taxes and taxable-equivalent adjustment

     126        137        95          (8.0     32.6          575        434        32.5  

Net income

     376        410        286          (8.3     31.5          1,720        1,300        32.3  

Net (income) loss attributable to noncontrolling interests

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

Net income attributable to U.S. Bancorp

     $376        $410        $286          (8.3     31.5          $1,720        $1,300        32.3  

Average Balance Sheet Data

                          

Loans

     $32,351        $31,378        $30,992          3.1       4.4          $30,856        $31,539        (2.2

Other earning assets

     356        5        5          nm       nm          93        5        nm  

Goodwill

     3,219        3,168        3,160          1.6       1.9          3,185        3,060        4.1  

Other intangible assets

     473        496        572          (4.6     (17.3        508        581        (12.6

Assets

     38,281        37,173        36,508          3.0       4.9          36,553        36,497        .2  

Noninterest-bearing deposits

     4,247        4,913        5,836          (13.6     (27.2        4,861        4,351        11.7  

Interest-bearing deposits

     155        150        130          3.3       19.2          145        121        19.8  

Total deposits

     4,402        5,063        5,966          (13.1     (26.2        5,006        4,472        11.9  

Total U.S. Bancorp shareholders’ equity

     7,936        7,561        8,039          5.0       (1.3        7,643        7,462        2.4  

(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 $376 million of the Company’s net income in the fourth quarter of 2021, compared with $286 million in the fourth quarter of 2020. Total net revenue increased $66 million (4.5 percent) primarily due to higher noninterest income of $101 million (12.5 percent), partially offset by lower net interest income of $35 million (5.4 percent). Net interest income decreased primarily due to lower loan yields driven by higher credit card payment rates and a decline in deposits related to lower prepaid card processing activities as government stimulus dissipates. 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 merchant processing services revenue driven by higher sales volume and higher merchant fees, partially offset by higher rebates. There was also solid growth in corporate payment products revenue driven by improving business spending across all product groups. Strong sales also drove an increase in credit and debit card revenue. Total noninterest expense increased $16 million (1.8 percent) reflecting higher net shared services expense driven by investment in infrastructure and technology development in addition to the timing of marketing campaigns, partially offset by higher incremental costs related to the prepaid card business in the fourth quarter of 2020. The provision for credit losses decreased $71 million (34.8 percent) primarily due to a pending portfolio sale and stronger credit quality in the current year.

 

 

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TREASURY AND CORPORATE SUPPORT (a)         
($ in millions)                       Percent Change                         
     

4Q

2021

   

3Q

2021

   

4Q  

2020  

    

4Q21 vs

3Q21

    4Q21 vs
4Q20
        

Full Year

2021

   

Full Year

2020

   

Percent

Change

 

Condensed Income Statement

                      

Net interest income (taxable-equivalent basis)

     $75       $76       $(39)         (1.3     nm          $163       $(54     nm  

Noninterest income

     198       201       234          (1.5     (15.4        817       784       4.2  

Securities gains (losses), net

     15       20       34          (25.0     (55.9        103       177       (41.8

Total net revenue

     288       297       229          (3.0     25.8          1,083       907       19.4  

Noninterest expense

     192       198       162          (3.0     18.5          925       928       (.3

Other intangibles

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

Total noninterest expense

     192       198       162          (3.0     18.5          925       928       (.3

Income (loss) before provision and taxes

     96       99       67          (3.0     43.3          158       (21     nm  

Provision for credit losses

     (275     (330     177          16.7       nm          (1,514     2,190       nm  

Income (loss) before income taxes

     371       429       (110)         (13.5     nm          1,672       (2,211     nm  

Income taxes and taxable-equivalent adjustment

     37       41       (93)         (9.8     nm          135       (928     nm  

Net income (loss)

     334       388       (17)         (13.9     nm          1,537       (1,283     nm  

Net (income) loss attributable to noncontrolling interests

     (5     (6     (6)         16.7       16.7          (22     (26     15.4  

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

     $329       $382       $(23)         (13.9     nm          $1,515       $(1,309     nm  
   

Average Balance Sheet Data

                             

Loans

     $3,665       $3,643       $3,627          .6       1.0          $3,722       $3,452       7.8  

Other earning assets

     207,935       193,989       181,737          7.2       14.4          196,211       162,503       20.7  

Goodwill

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

Other intangible assets

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

Assets

     233,622       219,196       208,690          6.6       11.9          221,978       188,917       17.5  

Noninterest-bearing deposits

     2,723       2,599       2,104          4.8       29.4          2,629       2,263       16.2  

Interest-bearing deposits

     1,378       1,290       1,145          6.8       20.3          1,634       2,756       (40.7

Total deposits

     4,101       3,889       3,249          5.5       26.2          4,263       5,019       (15.1
   

Total U.S. Bancorp shareholders’ equity

     18,045       17,490       14,947          3.2       20.7          16,748       14,046       19.2  
   

(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 $329 million of the Company’s net income in the fourth quarter of 2021, compared with a $23 million net loss in the fourth quarter of 2020. Total net revenue was higher by $59 million (25.8 percent) due to an increase of $114 million in net interest income, partially offset by a decrease in noninterest income of $55 million (20.5 percent). Net interest income increased primarily due to favorable funding and deposit mix and higher investment portfolio balances. The decrease in total noninterest income reflected lower other noninterest income driven by lower tax-advantaged investment syndication revenue in the fourth quarter of 2021 and lower securities gains. Total noninterest expense increased $30 million (18.5 percent) primarily due to higher compensation expense as a result of performance-based incentives, merit, and higher employee benefits driven by higher medical claims as well as higher amortization related to tax-advantaged investments. These increases were mostly offset by lower COVID-19 related accruals in the current year, including recognizing liabilities related to future delivery exposures for merchant and airline processing, and lower severance and other accruals, in addition to lower net shared services expense. The provision for credit losses decreased $452 million reflecting the residual impact of changes in the allowance for credit losses being impacted by deteriorating economic conditions in the fourth quarter of 2020 compared with 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 4Q21 Earnings Conference Call January 19, 2022 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; 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. In addition, U.S. Bancorp's proposed acquisition of MUFG Union Bank presents risks and uncertainties, including, among others: the risk that the cost savings, any revenue synergies and other anticipated benefits of the proposed acquisition may not be realized or may take longer than anticipated to be realized; the risk that U.S. Bancorp's business could be disrupted as a result of the announcement and pendency of the proposed acquisition and diversion of management's attention from ongoing business operations and opportunities; the possibility that the proposed acquisition, including the integration of MUFG Union Bank, may be more costly or difficult to complete than anticipated; delays in closing the proposed acquisition; and the failure of required governmental approvals to be obtained or any other closing conditions in the definitive purchase agreement to be satisfied. 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

4Q21 Highlights * Taxable-equivalent basis; see slide 24 for calculation ** Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology was 9.6% as of 12/31/21. *** 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 24 and 25 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 ** Interactive Voice Response Total Digital includes both online and mobile platforms 11/30/21


Slide 6

With 1.1 million business banking relationships**, there is a significant opportunity for us to deepen current relationships and acquire new customers Banking and Payments* Relationships Business Banking only Business Banking & Payments Payments only Business Banking & Payments * Payments includes Merchant Acquiring and card relationships within Retail Payment Solutions ** As defined by businesses with under $25M in revenue Business Banking and Payments Trends


Slide 7

Average Loans +2.0% linked quarter +0.1% year-over-year On a linked quarter basis, average total loans were higher primarily due to higher total commercial loans, higher credit card balances, higher residential mortgages, and higher other retail loans. On a year-over-year basis, average total loans were higher primarily due to strong growth in credit card balances and in other retail loans. The increase in other retail loans was driven by strong auto and recreational vehicle lending, offset by decreases in home equity and second mortgages. The increase in other retail loans was further offset by lower total commercial loans and lower total commercial real estate loans. $ in billions


Slide 8

Average Deposits +4.3% linked quarter +6.5% 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 Wealth Management and Investment Services and Corporate and Commercial Banking, while the year-over-year increase was primarily driven by Corporate and Commercial Banking and Wealth Management and Investment Services, partially offset by a decrease in Payments Services. 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. $ in billions


Slide 9

Credit Quality NCO Ratio -3 bps QoQ -41 bps YoY NPAs -7.0% QoQ -32.4% YoY $ in millions, except allowance for credit losses in billions Allowance for Credit Losses by Loan Class, 4Q21   Amount ($B) Loans and Leases Outstanding (%) Commercial $1.8 1.7% Commercial Real Estate 1.1 2.9% Residential Mortgage 0.6 0.7% Credit Card 1.7 7.4% Other Retail 1.0 1.5% Total $6.2 2.0%


Slide 10

Earnings Summary


Slide 11

Net Interest Income Linked Quarter Net interest income decreased, primarily due to lower loan fees related to the SBA Paycheck Protection Program. The net interest margin decreased, primarily reflecting lower loan fees related to the SBA Paycheck Protection Program, as well as the impact of strong deposit flows and related investment and cash balances strategies. Year-over-Year Net interest income decreased, primarily due to lower loan spreads and mix of earning assets, partially offset by higher investment portfolio balances and the benefit of deposit and funding mix. The net interest margin decreased, primarily due to the mix of loans, lower loan spreads and higher investment portfolio balances, partially offset by the net benefit of funding composition. -1.5% linked quarter -1.6% year-over-year $ in millions Net interest income on a taxable-equivalent basis; see slide 24 for calculation


Slide 12

Noninterest Income -5.9% linked quarter -0.6% year-over-year Linked Quarter Mortgage banking revenue decreased, driven by lower production volume and related gain on sale margins and the slightly unfavorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities. Payment services revenue decreased, as credit card revenue decreased due to lower interchange rate, net of higher volume and merchant processing services decreased primarily driven by lower rate and sales volume in sectors that continue to be negatively impacted by the pandemic. Year-over-Year Payment services revenue increased, due to growth in credit and debit card revenue driven by higher net interchange revenue related to sales volume as well as stronger fee activity. In addition, corporate payment products revenue increased primarily due to higher sales volume, and merchant processing services revenue increased driven by higher sales volume as well as higher merchant fees. Trust and Investment Management fees increased, driven by business growth, favorable market conditions and activity related to the acquisition of PFM Asset Management LLC. Mortgage income decreased, driven by lower production volume, given declining refinancing activity, 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. $ 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 13

Payment Services Payment Fees as a % of Net Revenue 2019 4Q21 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 27% of 4Q21 net revenue Merchant Acquiring Travel & Hospitality* 22% 22% Airline 15% 9% All Other 63% 69% CPS Travel & Entertainment 18% 10% All Other 82% 90% RPS** Travel*** (Credit & Debit) 7% 4% All Other 93% 96% % of Merchant Acquiring Volume 2019 4Q21 % of CPS Volume 2019 4Q21 % of RPS Volume 2019 4Q21 * 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 – December 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, despite late quarter softness from Omicron. In 4Q21, prepaid card related fee revenue was 12% of total credit and debit card fee revenue (compared to 11% in FY 19).


Slide 14

Noninterest Expense +3.0% linked quarter +5.0% year-over-year Linked Quarter Employee benefits expense increased, driven by higher medical claims expense. Professional services expense increased, primarily due to an increase in business investment and related initiatives. Other non-interest expense decreased, primarily due to lower accruals related to future delivery exposures for merchant and airline processing and other accruals, partially offset by seasonally higher amortization of tax-advantaged investments, which were scaled back in 2020 due to the pandemic. Year-over-Year Compensation expense increased, due to performance-based incentives, merit, hiring to support business growth and revenue-related compensation driven by business production. Employee benefits expense increased, driven by higher medical claims expense and higher payroll taxes. Other noninterest expense decreased, primarily due to higher COVID-19 related accruals in the fourth quarter of 2020, including recognizing liabilities related to future delivery exposures for merchant and airline processing and other accruals. $ in millions PPS = postage, printing and supplies


Slide 15

Capital Position * Ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology ** Non-GAAP; see slide 26 for calculations


Slide 16

Appendix


Slide 17

Average Loans Linked Quarter Average total loans increased by $6.0 billion, or 2.0% Average commercial loans increased by $2.7 billion, or 2.6% Average residential mortgage loans increased by $1.8 billion, or 2.4% Average other retail loans increased by $1.2 billion, or 1.9% Year-over-Year Average total loans increased by $0.4 billion, or 0.1% Average other retail loans increased $4.1 billion, or 7.2% Average commercial loans decreased by $1.9 billion, or 1.8% Average commercial real estate loans decreased by $1.2 billion, or 3.1% Key Points Year-over-Year Growth 2.5% (1.2%) (7.5%) (4.6%) 0.1% Commercial CRE Res Mtg Other Retail Credit Card Average Loans ($bn)


Slide 18

Year-over-Year Growth 18.5% 17.5% 6.4% 6.4% 6.5% Time Money Market Checking and Savings Noninterest-bearing Average Deposits Key Points Average Deposits ($bn) Linked Quarter Average total deposits increased by $18.4 billion, or 4.3% Average low-cost deposits (NIB, interest checking, savings and money market) increased by $19.1 billion, or 4.7% Year-over-Year Average total deposits increased by $27.4 billion, or 6.5% Average low-cost deposits (NIB, interest checking, savings and money market) increased by $37.4 billion, or 9.6%


Slide 19

Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm4Q20 3Q21 4Q21 Average Loans$106,421 $101,832 $104,508 30-89 Delinquencies0.31% 0.16% 0.47% 90+ Delinquencies0.05% 0.04% 0.04% Nonperforming Loans0.36% 0.21% 0.16% Linked Quarter Growth, including PPP (7.9%) (4.1%) 0.9% (1.1%) 2.6% Average loans increased by a total of 2.6% on a linked quarter basis, excluding runoff of the Paycheck Protection Program (PPP) forgiveness average loan growth increased by 4.6% Net charge-offs ratio remained low at 0.02%, while 30-89 day delinquencies increased slightly during the quarter related largely to expiration of PPP loans and seasonality $106,421 $102,091 $102,974 $101,832 $104,508 Linked Quarter Growth, excluding PPP (8.0%) (3.7%) 0.7% 1.7% 4.6%


Slide 20

$mm4Q20 3Q21 4Q21 Average Loans$40,098 $38,921 $38,851 30-89 Delinquencies0.47% 0.08%0.20% 90+ Delinquencies0.01%0.05%0.03% Nonperforming Loans1.14% 0.76% 0.73% Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points Linked Quarter Growth (2.0%) (3.3%) (0.6%) 0.9% (0.2%) Average loans decreased by (0.2%) on a linked quarter basis Net recoveries during the quarter, performance continues to reflect the general economic recovery


Slide 21

Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm4Q203Q214Q21 Average Loans$76,809 $74,104 $75,858 30-89 Delinquencies0.32%0.20%0.15% 90+ Delinquencies0.18% 0.15% 0.24% Nonperforming Loans0.32%0.32%0.30% Linked Quarter Growth 1.3% (2.1%) (2.5%) 1.0% 2.4% Originations continued to be high credit quality (weighted average FICO of 770, weighted average LTV of 65%) Customers in payment relief continued to decline Charge-off performance continues to reflect overall portfolio credit quality and strength in housing values * Represents residential mortgage loan balances in forbearance; excludes GNMA loans, whose repayments are insured by the FHA or guaranteed by the Department of VA ($0.8 billion or 10.0% of GNMA loans in 4Q21)


Slide 22

Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm4Q203Q214Q21 Average Loans$21,937 $21,905$22,399 30-89 Delinquencies1.04% 0.83%0.86% 90+ Delinquencies0.88%0.66%0.73% Nonperforming Loans- %- %- % Linked Quarter Growth (0.5%) (3.6%) (0.1%) 3.7% 2.3% Linked quarter loan growth in 4Q21 driven by increase in consumer spending due to seasonality Net charge-off ratio remained low during the quarter due to the lingering effects of federal stimulus programs and changes in consumer behavior due to the pandemic


Slide 23

Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Points Linked Quarter Growth Key Statistics Key Statistics $mm4Q203Q214Q21 Average Loans$57,043 $59,977$61,139 30-89 Delinquencies0.56%0.41%0.44% 90+ Delinquencies0.15%0.11%0.11% Nonperforming Loans0.27%0.26%0.24% Continued relative low net charge-offs are supported by strong portfolio credit quality and collateral values in housing and used autos Stable credit performance on a linked quarter basis including low net charge-offs, delinquencies, and nonperforming loan levels 0.5% (0.5%) 2.7% 2.9% 1.9%


Slide 24

Non-GAAP Financial Measures (4) – see slide 27 for corresponding notes


Slide 25

Non-GAAP Financial Measures (1) – see slide 27 for corresponding notes


Slide 26

Non-GAAP Financial Measures * Preliminary data. Subject to change prior to filings with applicable regulatory agencies. (1), (2), (3) – see slide 27 for corresponding notes


Slide 27

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 28

U.S. Bancorp 4Q21 Earnings Conference Call January 19, 2022

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