US Bancorp : 1Q 2022 Business Line Schedules

Supplemental Business Line

Schedules

1Q 2022

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. BancorpPercent ChangeBusiness Line

1Q 2022

4Q 2021

1Q 2021

1Q22 vs

1Q22 vs

4Q21

1Q21

Corporate and Commercial

Banking

$418

$313

Consumer and Business

Banking

393

485

Wealth Management and

Investment Services Payment Services Treasury and Corporate

206 372

202 371

Support

Consolidated Company

168 $1,557

302 $1,673

$469 575 225 487 524

• 33.5 (10.9)

• (19.0) (31.7)

• 2.0 (8.4)

• .3 (23.6)

• (44.4) (67.9)

• $2,280 (6.9) (31.7)

(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 2022, certain organization and methodology changes were made and, accordingly, prior period results were restated and presented on a comparable basis.

CORPORATE AND COMMERCIAL BANKING (a)

4Q21 1Q21

1Q	4Q	1Q
2022	2021	2021
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$735	$684	$719	7.5	2.2
Noninterest income	245	249	268	(1.6)	(8.6)
Securities gains (losses), net	--	--	--	--	--
Total net revenue	980	933	987	5.0	(.7)
Noninterest expense	419	418	409	.2	2.4
Other intangibles	--	--	--	--	--
Total noninterest expense	419	418	409	.2	2.4
Income before provision and taxes	561	515	578	8.9	(2.9)
Provision for credit losses	3	98	(48)	(96.9)	nm
Income before income taxes	558	417	626	33.8	(10.9)
Income taxes and
taxable-equivalent adjustment	140	104	157	34.6	(10.8)
Net income	418	313	469	33.5	(10.9)
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--
Net income attributable to U.S. Bancorp	$418	$313	$469	33.5	(10.9)
Average Balance Sheet Data
Loans	$115,634	$106,262	$101,927	8.8	13.4
Other earning assets	4,676	4,690	4,321	(.3)	8.2
Goodwill	1,912	1,912	1,647	--	16.1
Other intangible assets	4	4	5	--	(20.0)
Assets	127,651	118,035	114,069	8.1	11.9
Noninterest-bearing deposits	62,285	65,450	56,281	(4.8)	10.7
Interest-bearing deposits	86,618	75,243	71,377	15.1	21.4
Total deposits	148,903	140,693	127,658	5.8	16.6
Total U.S. Bancorp shareholders' equity	13,710	13,666	14,354	.3	(4.5)
(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 $418 million of the Company's net income in the first quarter of 2022, compared with $469 million in the first quarter of 2021. Total net revenue was $7 million (0.7 percent) lower due to a decrease of $23 million (8.6 percent) in total noninterest income, partially offset by an increase of $16 million (2.2 percent) in net interest income. Net interest income increased primarily due to higher loan and deposit balances, partially offset by the impact of loan mix and related yields as well as unfavorable changes in deposit rates. Total noninterest income decreased primarily due to lower corporate bond fees and trading revenue within the capital markets business, partially offset by stronger treasury management fees due to core growth driven by the economic recovery. Total noninterest expense increased $10 million (2.4 percent) compared with a year ago primarily due to an increase in net shared services expense driven by investment in infrastructure and technology development as well as higher compensation expense primarily due to merit and hiring to support business growth, partially offset by lower performance-based incentives related to capital markets activity. The provision for credit losses increased $51 million compared with the first quarter of 2021 primarily due to loan loss provisions supporting stronger growth in loan balances in the current year linked quarter, partially offset by improving portfolio credit quality in the current year.

CONSUMER AND BUSINESS BANKING (a)

4Q21 1Q21

1Q	4Q	1Q
2022	2021	2021
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$1,517	$1,517	$1,505	--	.8
Noninterest income	461	583	569	(20.9)	(19.0)
Securities gains (losses), net	--	--	--	--	--
Total net revenue	1,978	2,100	2,074	(5.8)	(4.6)
Noninterest expense	1,402	1,451	1,341	(3.4)	4.5
Other intangibles	3	3	3	--	--
Total noninterest expense	1,405	1,454	1,344	(3.4)	4.5
Income before provision and taxes	573	646	730	(11.3)	(21.5)
Provision for credit losses	49	(1)	(37)	nm	nm
Income before income taxes	524	647	767	(19.0)	(31.7)
Income taxes and
taxable-equivalent adjustment	131	162	192	(19.1)	(31.8)
Net income	393	485	575	(19.0)	(31.7)
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--
Net income attributable to U.S. Bancorp	$393	$485	$575	(19.0)	(31.7)
Average Balance Sheet Data
Loans	$141,106	$140,865	$141,719	.2	(.4)
Other earning assets	4,381	6,569	10,177	(33.3)	(57.0)
Goodwill	3,261	3,262	3,475	--	(6.2)
Other intangible assets	3,176	2,966	2,493	7.1	27.4
Assets	157,696	159,578	164,131	(1.2)	(3.9)
Noninterest-bearing deposits	32,094	34,294	32,861	(6.4)	(2.3)
Interest-bearing deposits	166,765	162,934	151,406	2.4	10.1
Total deposits	198,859	197,228	184,267	.8	7.9
Total U.S. Bancorp shareholders' equity	12,275	12,231	12,496	.4	(1.8)
(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 $393 million of the Company's net income in the first quarter of 2022, compared with $575 million in the first quarter of 2021. Total net revenue was lower by $96 million (4.6 percent) due to a decrease in total noninterest income of $108 million (19.0 percent), partially offset by higher net interest income of $12 million (0.8 percent). Net interest income reflected strong growth in interest-bearing deposit balances and favorable funding mix, partially offset by lower loan fees related to the Paycheck Protection Program (PPP). Total noninterest income decreased primarily due to lower mortgage banking revenue reflecting lower application volumes, given declining refinance activities, and lower 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, as well as higher performing loan sales. Additionally, other noninterest income decreased due to lower retail leasing end-of-term residual gains. Offsetting these decreases, deposit service charges increased driven by higher customer spend activity, net of the impact of the elimination of certain consumer NSF fees in the first quarter of 2022. Total noninterest expense increased $61 million (4.5 percent) primarily due to increases in net shared services expense due to investments in digital capabilities and higher compensation expense from merit and core business growth. The provision for credit losses increased $86 million due to higher loan loss provisions reflecting relatively stable ending balances and credit quality in the current quarter, compared with balance reductions and credit quality improvement in the prior year linked quarter.

WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)

4Q21 1Q21

1Q	4Q	1Q
2022	2021	2021
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$274	$246	$268	11.4	2.2
Noninterest income	596	583	531	2.2	12.2
Securities gains (losses), net	--	--	--	--	--
Total net revenue	870	829	799	4.9	8.9
Noninterest expense	577	550	492	4.9	17.3
Other intangibles	10	4	2	nm	nm
Total noninterest expense	587	554	494	6.0	18.8
Income before provision and taxes	283	275	305	2.9	(7.2)
Provision for credit losses	8	5	5	60.0	60.0
Income before income taxes	275	270	300	1.9	(8.3)
Income taxes and
taxable-equivalent adjustment	69	68	75	1.5	(8.0)
Net income	206	202	225	2.0	(8.4)
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--
Net income attributable to U.S. Bancorp	$206	$202	$225	2.0	(8.4)
Average Balance Sheet Data
Loans	$20,666	$19,614	$16,846	5.4	22.7
Other earning assets	259	229	279	13.1	(7.2)
Goodwill	1,761	1,656	1,619	6.3	8.8
Other intangible assets	265	130	42	nm	nm
Assets	24,446	22,963	20,120	6.5	21.5
Noninterest-bearing deposits	27,350	29,220	21,338	(6.4)	28.2
Interest-bearing deposits	69,909	74,192	83,474	(5.8)	(16.3)
Total deposits	97,259	103,412	104,812	(5.9)	(7.2)
Total U.S. Bancorp shareholders' equity	3,595	3,318	3,034	8.3	18.5
(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 $206 million of the Company's net income in the first quarter of 2022, compared with $225 million in the first quarter of 2021. Total net revenue increased $71 million (8.9 percent) year-over-year reflecting an increase of $6 million (2.2 percent) in net interest income and an increase of $65 million (12.2 percent) in total noninterest income. Net interest income increased slightly year-over-year primarily due to higher average noninterest-bearing deposits 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 as well as the impact of the PFM acquisition on trust and investment fees, partially offset by higher fee waivers related to money market funds. Total noninterest expense increased $93 million (18.8 percent) compared with the first quarter of 2021 reflecting the PFM acquisition, compensation expense as a result of merit and performance-based incentives, litigation settlements, fraud related losses and core business growth. The provision for credit losses increased $3 million (60.0 percent) due to increased loan loss provisions supporting stronger growth in ending loans and a modest shift in credit quality in the current period compared with the prior year quarter.