U S Bancorp : 1Q 2021 Business Line Schedules

Supplemental

Business Line

Schedules

1Q 2021

CORPORATE AND COMMERCIAL BANKING

CONSUMER AND BUSINESS BANKING

WEALTH MANAGEMENT AND INVESTMENT SERVICES

PAYMENT SERVICES

TREASURY AND CORPORATE SUPPORT

LINE OF BUSINESS FINANCIAL PERFORMANCE (a)

	($ in millions)	Net Income Attributable
		to U.S. Bancorp			Percent Change
		1Q	4Q	1Q		1Q21 vs	1Q21 vs
	Business Line	2021	2020	2020		4Q20	1Q20
	Corporate and Commercial			$141	10.0
	Banking	$419	$381	nm
	Consumer and Business	671	730	619	(8.1)	8.4
	Banking
	Wealth Management and				13.2	(17.0)
	Investment Services	171	151	206
	Payment Services	479	282	303	69.9	58.1
	Treasury and Corporate	540	(25)	(98)		nm	nm
	Support
	Consolidated Company	$2,280	$1,519	$1,171	50.1	94.7

(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)	1Q	4Q	1Q	Percent Change
		1Q21 vs	1Q21 vs
		2021	2020	2020	4Q20	1Q20
	Condensed Income Statement
	Net interest income (taxable-equivalent basis)	$666	$731	$784	(8.9)	(15.1)
	Noninterest income	259	208	271	24.5	(4.4)
	Securities gains (losses), net	--	--	--	--	--
	Total net revenue	925	939	1,055	(1.5)	(12.3)
	Noninterest expense	406	392	443	3.6	(8.4)
	Other intangibles	--	--	--	--	--
	Total noninterest expense	406	392	443	3.6	(8.4)
	Income before provision and taxes	519	547	612	(5.1)	(15.2)
	Provision for credit losses	(40)	39	424	nm	nm
	Income before income taxes	559	508	188	10.0	nm
	Income taxes and
	taxable-equivalent adjustment	140	127	47	10.2	nm
	Net income	419	381	141	10.0	nm
	Net (income) loss attributable to
	noncontrolling interests	--	--	--	--	--
	Net income attributable to U.S. Bancorp	$419	$381	$141	10.0	nm
	Average Balance Sheet Data
	Loans	$94,872	$98,919	$103,368	(4.1)	(8.2)
	Other earning assets	4,308	4,141	4,555	4.0	(5.4)
	Goodwill	1,647	1,647	1,647	--	--
	Other intangible assets	5	6	7	(16.7)	(28.6)
	Assets	107,022	111,599	115,308	(4.1)	(7.2)
	Noninterest-bearing deposits	51,020	48,889	29,370	4.4	73.7
	Interest-bearing deposits	67,750	76,357	80,657	(11.3)	(16.0)
	Total deposits	118,770	125,246	110,027	(5.2)	7.9
	Total U.S. Bancorp shareholders' equity	13,074	14,146	14,182	(7.6)	(7.8)
	(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 $419 million of the Company's net income in the first quarter of 2021, compared with $141 million in the first quarter of 2020. Total net revenue decreased $130 million (12.3 percent) due to a decrease of $118 million (15.1 percent) in net interest income and a decrease of $12 million (4.4 percent) in total noninterest income. Net interest income decreased primarily due to the impact of declining interest rates on the margin benefit from deposits and lower loan balances, partially offset by favorable deposit mix with higher noninterest-bearing balances and higher loan fees. Total noninterest income decreased year-over-year primarily driven by lower capital markets activities, including trading revenue, and commercial leasing fees, partially offset by higher non-yield loan fees on unused commitments. Total noninterest expense declined $37 million (8.4 percent) compared with a year ago primarily due to lower net shared services expense and production incentives as well as lower marketing and business development expense driven by a reduction in travel as a result of COVID-19. The provision for credit losses decreased $464 million primarily due to a favorable change in the reserve allocation driven by improving credit risk ratings.

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CONSUMER AND BUSINESS BANKING (a)

	($ in millions)				Percent Change
		1Q	4Q	1Q	1Q21 vs	1Q21 vs
		2021	2020	2020	4Q20	1Q20
	Condensed Income Statement
	Net interest income (taxable-equivalent basis)	$1,625	$1,634	$1,531	(.6)	6.1
	Noninterest income	617	791	757	(22.0)	(18.5)
	Securities gains (losses), net	--	--	--	--	--
	Total net revenue	2,242	2,425	2,288	(7.5)	(2.0)
	Noninterest expense	1,388	1,431	1,336	(3.0)	3.9
	Other intangibles	3	4	4	(25.0)	(25.0)
	Total noninterest expense	1,391	1,435	1,340	(3.1)	3.8
	Income before provision and taxes	851	990	948	(14.0)	(10.2)
	Provision for credit losses	(44)	16	123	nm	nm
	Income before income taxes	895	974	825	(8.1)	8.5
	Income taxes and
	taxable-equivalent adjustment	224	244	206	(8.2)	8.7
	Net income	671	730	619	(8.1)	8.4
	Net (income) loss attributable to
	noncontrolling interests	--	--	--	--	--
	Net income attributable to U.S. Bancorp	$671	$730	$619	(8.1)	8.4
	Average Balance Sheet Data		$156,729	$146,718	(2.3)	4.4
	Loans	$153,177
	Other earning assets	10,203	8,966	4,967	13.8	nm
	Goodwill	3,475	3,475	3,574	--	(2.8)
	Other intangible assets	2,491	2,137	2,411	16.6	3.3
	Assets	175,541	176,811	161,886	(.7)	8.4
	Noninterest-bearing deposits	39,186	39,623	27,866	(1.1)	40.6
	Interest-bearing deposits	166,876	161,298	133,718	3.5	24.8
	Total deposits	206,062	200,921	161,584	2.6	27.5
	Total U.S. Bancorp shareholders' equity	13,453	13,462	13,422	(.1)	.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 $671 million of the Company's net income in the first quarter of 2021, compared with $619 million in the first quarter of 2020. Total net revenue decreased $46 million (2.0 percent) due to a decrease of $140 million (18.5 percent) in total noninterest income, partially offset by an increase in net interest income of $94 million (6.1 percent). Net interest income reflected continued strong growth in deposit balances and loan growth, driven by mortgage and indirect lending as well as by loans made under the SBA's Paycheck Protection Program and GNMA buybacks. The increase in net interest income also reflected higher loan fees and favorable loan spreads, partially offset by the impact of declining interest rates on deposit spreads. Total noninterest income decreased primarily due to lower mortgage banking revenue reflecting a reduction in the fair value of mortgage servicing rights, net of hedging activities, partially offset by higher production volume and related gain of sale margins compared with a year ago as well as lower deposit service charges. Total noninterest expense increased $51 million (3.8 percent) primarily due to an increase in net shared services expense due to investments in digital capabilities and higher variable compensation related to mortgage banking origination activities. The provision for credit losses decreased $167 million due to a favorable change in the reserve allocation primarily reflecting lower delinquency rates in consumer portfolios and a reduction in end of period outstanding balances in the first quarter of 2021 compared with growth in the first quarter of 2020.

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WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)

	($ in millions)	1Q	4Q	1Q	Percent Change
		1Q21 vs	1Q21 vs
		2021	2020	2020	4Q20	1Q20
	Condensed Income Statement
	Net interest income (taxable-equivalent basis)	$204	$222	$284	(8.1)	(28.2)
	Noninterest income	492	478	466	2.9	5.6
	Securities gains (losses), net	--	--	--	--	--
	Total net revenue	696	700	750	(.6)	(7.2)
	Noninterest expense	459	490	449	(6.3)	2.2
	Other intangibles	2	3	3	(33.3)	(33.3)
	Total noninterest expense	461	493	452	(6.5)	2.0
	Income before provision and taxes	235	207	298	13.5	(21.1)
	Provision for credit losses	7	5	23	40.0	(69.6)
	Income before income taxes	228	202	275	12.9	(17.1)
	Income taxes and
	taxable-equivalent adjustment	57	51	69	11.8	(17.4)
	Net income	171	151	206	13.2	(17.0)
	Net (income) loss attributable to
	noncontrolling interests	--	--	--	--	--
	Net income attributable to U.S. Bancorp	$171	$151	$206	13.2	(17.0)
	Average Balance Sheet Data
	Loans	$12,443	$12,043	$10,608	3.3	17.3
	Other earning assets	279	292	281	(4.5)	(.7)
	Goodwill	1,619	1,618	1,617	.1	.1
	Other intangible assets	42	34	44	23.5	(4.5)
	Assets	15,662	14,968	13,950	4.6	12.3
	Noninterest-bearing deposits	20,277	18,699	13,232	8.4	53.2
	Interest-bearing deposits	71,629	68,328	68,842	4.8	4.0
	Total deposits	91,906	87,027	82,074	5.6	12.0
	Total U.S. Bancorp shareholders' equity	2,634	2,597	2,571	1.4	2.5
	(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 $171 million of the Company's net income in the first quarter of 2021, compared with $206 million in the first quarter of 2020. Total net revenue decreased $54 million (7.2 percent) year-over-year reflecting a decrease in net interest income of $80 million (28.2 percent), partially offset by an increase of $26 million (5.6 percent) in noninterest income. Net interest income decreased year-over-year primarily due to the declining margin benefit of deposits given lower interest rates, partially offset by higher noninterest-bearing deposits and favorable deposit mix. Total noninterest income increased primarily due to the impact of core business growth on trust and investment management fees and favorable market conditions, partially offset by higher fee waivers related to money market funds. Total noninterest expense increased $9 million (2.0 percent) compared with the first quarter of 2020 reflecting increased other noninterest expense and higher salary expense due to merit in the current year quarter. The provision for credit losses decreased $16 million (69.6 percent) reflecting a favorable change in the reserve allocation primarily driven by stable credit quality relative to credit quality deterioration in the first quarter of 2020.

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