US Bancorp : 2Q 2021 Business Line Schedules

Supplemental

Business Line

Schedules

2Q 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				Net Income Attributable
		to U.S. Bancorp			Percent Change		to U.S. Bancorp
		2Q	1Q	2Q		2Q21 vs	2Q21 vs		YTD	YTD	Percent
	Business Line	2021	2021	2020		1Q21	2Q20	2021	2020		Change
	Corporate and Commercial
	Banking	$378	$424	$574	(10.8)	(34.1)	$802	$716		12.0
	Consumer and Business
	Banking	739	650	656	13.7	12.7	1,389	1,263		10.0
	Wealth Management and
	Investment Services	149	184	205	(19.0)	(27.3)	333	425		(21.6)
	Payment Services	443	491	391	(9.8)	13.3	934	691		35.2
	Treasury and Corporate
	Support	273	531	(1,137)	(48.6)	nm		804	(1,235)		nm
	Consolidated Company	$1,982	$2,280	$689	(13.1)	nm		$4,262	$1,860		nm

(a) preliminary data

Lines of Business

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

2

CORPORATE AND COMMERCIAL BANKING (a)

($ in millions)				Percent Change
							2Q	1Q	2Q	2Q21 vs	2Q21 vs	YTD	YTD	Percent
							2021	2021	2020	1Q21	2Q20	2021	2020	Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$683	$672	$878	1.6	(22.2)				$1,355	$1,663	(18.5)
Noninterest income	255	259	339	(1.5)	(24.8)				514	610	(15.7)
Securities gains (losses), net	--	--	--	--	--				--	--	--
Total net revenue	938	931	1,217	.8	(22.9)				1,869	2,273	(17.8)
Noninterest expense	411	405	430	1.5	(4.4)				816	873	(6.5)
Other intangibles	--	--	--	--	--				--	--	--
Total noninterest expense		411	405	430	1.5	(4.4)				816	873	(6.5)
Income before provision and taxes			527	526	787	.2	(33.0)				1,053	1,400	(24.8)
Provision for credit losses	23	(40)	22	nm	4.5				(17)	446	nm
Income before income taxes				504	566	765	(11.0)	(34.1)				1,070	954	12.2
Income taxes and
taxable-equivalent adjustment	126	142	191	(11.3)	(34.0)				268	238	12.6
Net income					378	424	574	(10.8)	(34.1)				802	716	12.0
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--				--	--	--
Net income attributable to U.S. Bancorp							$378	$424	$574	(10.8)	(34.1)				$802	$716	12.0
Average Balance Sheet Data
Loans	$95,145	$94,866	$122,930	.3	(22.6)				$95,006	$113,147	(16.0)
Other earning assets	4,409	4,308	3,847	2.3	14.6				4,359	4,201	3.8
Goodwill	1,647	1,647	1,647	--	--				1,647	1,647	--
Other intangible assets	5	5	6	--	(16.7)				5	7	(28.6)
Assets	107,058	107,016	135,484	--	(21.0)				107,037	125,394	(14.6)
Noninterest-bearing deposits	54,958	51,074	38,749	7.6	41.8				53,027	34,074	55.6
Interest-bearing deposits	66,023	67,784	95,388	(2.6)	(30.8)				66,899	88,034	(24.0)
Total deposits							120,981	118,858	134,137	1.8	(9.8)				119,926	122,108	(1.8)
Total U.S. Bancorp shareholders' equity	13,200	13,712	15,274	(3.7)	(13.6)				13,455	14,631	(8.0)
(a) preliminary data

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

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

3

CONSUMER AND BUSINESS BANKING (a)

($ in millions)							2Q	1Q	2Q				Percent Change
										2Q21 vs	2Q21 vs				YTD	YTD			Percent
	2021	2021	2020				1Q21	2Q20	2021	2020			Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$1,650	$1,627	$1,475	1.4	11.9	$3,277	$3,007	9.0
Noninterest income	646	578	886	11.8	(27.1)	1,224	1,607	(23.8)
Securities gains (losses), net	--	--	--	--	--	--	--	--
Total net revenue	2,296	2,205	2,361	4.1	(2.8)	4,501	4,614	(2.4)
Noninterest expense	1,404	1,379	1,372	1.8	2.3	2,783	2,689	3.5
Other intangibles	3	3	4	--	(25.0)	6	8	(25.0)
Total noninterest expense		1,407	1,382	1,376	1.8	2.3	2,789	2,697		3.4
Income before provision and taxes		889	823	985		8.0	(9.7)		1,712	1,917		(10.7)
Provision for credit losses	(96)	(44)	110				nm	nm	(140)	233			nm
Income before income taxes		985	867	875		13.6	12.6		1,852	1,684		10.0
Income taxes and
taxable-equivalent adjustment	246	217	219	13.4	12.3	463	421	10.0
Net income		739	650	656		13.7	12.7		1,389	1,263		10.0
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--	--	--	--
Net income attributable to U.S. Bancorp		$739	$650	$656		13.7	12.7		$1,389	$1,263		10.0
Average Balance Sheet Data
Loans	$152,470	$153,178	$150,210	(.5)	1.5	$152,822	$148,462	2.9
Other earning assets	8,033	10,203	6,576	(21.3)	22.2	9,112	5,772	57.9
Goodwill	3,475	3,475	3,475	--	--	3,475	3,525	(1.4)
Other intangible assets	2,827	2,491	1,935	13.5	46.1	2,660	2,173	22.4
Assets	173,285	175,525	167,514	(1.3)	3.4	174,399	164,690	5.9
Noninterest-bearing deposits	40,477	39,028	34,499	3.7	17.3	39,757	31,130	27.7
Interest-bearing deposits	174,356	166,707	144,158	4.6	20.9	170,552	138,888	22.8
Total deposits		214,833	205,735	178,657		4.4	20.2		210,309	170,018		23.7
Total U.S. Bancorp shareholders' equity	13,361	13,561	13,752	(1.5)	(2.8)	13,460	13,389	.5
(a) preliminary data

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

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

4

WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)

($ in millions)							2Q	1Q	2Q				Percent Change
										2Q21 vs	2Q21 vs				YTD	YTD			Percent
	2021	2021	2020				1Q21	2Q20	2021	2020			Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$167	$203	$250	(17.7)	(33.2)	$370	$534	(30.7)
Noninterest income	547	531	499	3.0	9.6	1,078	1,001	7.7
Securities gains (losses), net	--	--	--	--	--	--	--	--
Total net revenue	714	734	749	(2.7)	(4.7)	1,448	1,535	(5.7)
Noninterest expense	501	479	474	4.6	5.7	980	941	4.1
Other intangibles	4	2	3				nm	33.3	6	6	--
Total noninterest expense		505	481	477	5.0	5.9	986	947		4.1
Income before provision and taxes		209	253	272		(17.4)	(23.2)		462	588		(21.4)
Provision for credit losses	10	8	(2)	25.0	nm	18	21	(14.3)
Income before income taxes		199	245	274		(18.8)	(27.4)		444	567		(21.7)
Income taxes and
taxable-equivalent adjustment	50	61	69	(18.0)	(27.5)	111	142	(21.8)
Net income		149	184	205		(19.0)	(27.3)		333	425		(21.6)
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--	--	--	--
Net income attributable to U.S. Bancorp		$149	$184	$205		(19.0)	(27.3)		$333	$425		(21.6)
Average Balance Sheet Data
Loans	$12,926	$12,446	$11,206	3.9	15.3	$12,688	$10,909	16.3
Other earning assets	237	279	285	(15.1)	(16.8)	258	283	(8.8)
Goodwill	1,618	1,619	1,616	(.1)	.1	1,618	1,617	.1
Other intangible assets	84	42	40				nm	nm	63	42	50.0
Assets	15,916	15,682	14,335	1.5	11.0	15,800	14,153	11.6
Noninterest-bearing deposits	22,249	20,377	16,396	9.2	35.7	21,318	14,848	43.6
Interest-bearing deposits	61,146	71,766	65,466	(14.8)	(6.6)	66,427	67,195	(1.1)
Total deposits		83,395	92,143	81,862		(9.5)	1.9		87,745	82,043		7.0
Total U.S. Bancorp shareholders' equity	2,640	2,574	2,481	2.6	6.4	2,607	2,475	5.3
(a) preliminary data

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

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

5