US Bancorp : 3Q 2021 Business Line Schedules

Supplemental

Business Line

Schedules

3Q 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	Percent
		3Q	2Q	3Q		3Q21 vs	3Q21 vs			YTD	YTD
	Business Line	2021	2021	2020		2Q21	3Q20	2021	2020			Change
	Corporate and Commercial		$429	$447	(6.1)	(9.8)	$1,291	$1,230			5.0
	Banking	$403
	Consumer and Business
	Banking	628	632	649	(.6)	(3.2)	1,833	1,747			4.9
	Wealth Management and
	Investment Services	196	198	227	(1.0)	(13.7)	618	737			(16.1)
	Payment Services	409	442	322	(7.5)	27.0	1,341	1,010			32.8
	Treasury and Corporate
	Support	392	281	(65)	39.5	nm		1,207	(1,284)			nm
	Consolidated Company	$2,028	$1,982	$1,580	2.3	28.4	$6,290	$3,440			82.8
	(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
						3Q	2Q	3Q	3Q21 vs	3Q21 vs	YTD	YTD	Percent
						2021	2021	2020	2Q21	3Q20	2021	2020			Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$717	$734	$852	(2.3)	(15.8)				$2,172	$2,623			(17.2)
Noninterest income	253	265	267	(4.5)	(5.2)				786	899			(12.6)
Securities gains (losses), net	--	--	--	--	--				--	--			--
Total net revenue	970	999	1,119	(2.9)	(13.3)				2,958	3,522			(16.0)
Noninterest expense	418	425	428	(1.6)	(2.3)				1,257	1,310			(4.0)
Other intangibles	--	--	--	--	--				--	--			--
Total noninterest expense		418	425	428	(1.6)	(2.3)				1,257	1,310			(4.0)
Income before provision and taxes		552	574	691	(3.8)	(20.1)				1,701	2,212			(23.1)
Provision for credit losses	15	2	95	nm	(84.2)				(20)	572			nm
Income before income taxes		537	572	596	(6.1)	(9.9)				1,721	1,640			4.9
Income taxes and
taxable-equivalent adjustment	134	143	149	(6.3)	(10.1)				430	410			4.9
Net income		403	429	447	(6.1)	(9.8)				1,291	1,230			5.0
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--				--	--			--
Net income attributable to U.S. Bancorp		$403	$429	$447	(6.1)	(9.8)				$1,291	$1,230			5.0
Average Balance Sheet Data
Loans	$102,431	$102,024	$115,547	.4	(11.4)				$102,117	$118,686			(14.0)
Other earning assets	4,722	4,409	4,110	7.1	14.9				4,485	4,170			7.6
Goodwill	1,650	1,647	1,647	.2	.2				1,648	1,647			.1
Other intangible assets	5	5	6	--	(16.7)				5	6			(16.7)
Assets	114,629	113,904	128,369	.6	(10.7)				114,182	131,106			(12.9)
Noninterest-bearing deposits	62,642	60,554	48,058	3.4	30.3				59,841	41,091			45.6
Interest-bearing deposits	68,917	69,626	87,558	(1.0)	(21.3)				69,999	90,581			(22.7)
Total deposits		131,559	130,180	135,616	1.1	(3.0)				129,840	131,672			(1.4)
Total U.S. Bancorp shareholders' equity	13,772	13,824	15,051	(.4)	(8.5)				13,995	15,201			(7.9)
(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 $403 million of the Company's net income in the third quarter of 2021, compared with $447 million in the third quarter of 2020. Total net revenue was $149 million (13.3 percent) lower due to a decrease of $135 million (15.8 percent) in net interest income and a decrease of $14 million (5.2 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 and slightly higher loan spreads. Average loans declined 11.4 percent as significant liquidity draws during the pandemic were paid down during the past several quarters. Total noninterest income decreased year-over-year primarily driven by lower capital markets activity and trading revenue, partially offset by continued stronger treasury management fees due to core growth driven by the economic recovery. Total noninterest expense decreased $10 million (2.3 percent) compared with a year ago primarily due to lower FDIC insurance expense, lower production incentives, and higher capitalized loan costs, partially offset by an increase in net shared services expense driven by investment in infrastructure and technology development. The provision for credit losses decreased $80 million (84.2 percent) compared with the third quarter of 2020 primarily due to a favorable change in the reserve allocation driven by improving portfolio credit quality in the current quarter, compared with deteriorating credit quality in the third quarter of 2020.

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CONSUMER AND BUSINESS BANKING (a)

($ in millions)				Percent Change			Percent
							3Q	2Q	3Q	3Q21 vs	3Q21 vs	YTD	YTD
							2021	2021	2020	2Q21	3Q20	2021	2020	Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$1,551	$1,537	$1,474	.9	5.2							$4,603	$4,239	8.6
Noninterest income	715	634	848	12.8	(15.7)							1,918	2,433	(21.2)
Securities gains (losses), net	--	--	--	--	--							--	--	--
Total net revenue	2,266	2,171	2,322	4.4	(2.4)							6,521	6,672	(2.3)
Noninterest expense	1,450	1,394	1,383	4.0	4.8							4,210	4,061	3.7
Other intangibles	3	3	4	--	(25.0)							9	12	(25.0)
Total noninterest expense		1,453	1,397	1,387	4.0	4.8							4,219	4,073	3.6
Income before provision and taxes		813	774	935	5.0	(13.0)							2,302	2,599	(11.4)
Provision for credit losses	(25)	(69)	69	63.8	nm	(143)	269	nm
Income before income taxes		838	843	866	(.6)	(3.2)							2,445	2,330	4.9
Income taxes and
taxable-equivalent adjustment	210	211	217	(.5)	(3.2)							612	583	5.0
Net income		628	632	649	(.6)	(3.2)							1,833	1,747	4.9
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--							--	--	--
Net income attributable to U.S. Bancorp		$628	$632	$649	(.6)	(3.2)							$1,833	$1,747	4.9
Average Balance Sheet Data
Loans	$140,833	$141,081	$145,229	(.2)	(3.0)							$141,220	$139,981	.9
Other earning assets	7,645	8,022	8,195	(4.7)	(6.7)							8,606	6,578	30.8
Goodwill	3,506	3,475	3,475	.9	.9							3,485	3,508	(.7)
Other intangible assets	2,754	2,827	1,942	(2.6)	41.8							2,692	2,095	28.5
Assets	160,882	161,948	164,246	(.7)	(2.0)							162,316	157,177	3.3
Noninterest-bearing deposits	34,416	33,882	34,288	1.6	.4							33,734	29,397	14.8
Interest-bearing deposits	160,271	158,792	133,095	.9	20.4							156,821	126,934	23.5
Total deposits		194,687	192,674	167,383	1.0	16.3							190,555	156,331	21.9
Total U.S. Bancorp shareholders' equity	12,277	12,359	13,562	(.7)	(9.5)							12,378	12,797	(3.3)
(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 $628 million of the Company's net income in the third quarter of 2021, compared with $649 million in the third quarter of 2020. Total net revenue was lower by $56 million (2.4 percent) due to a decrease in total noninterest income of $133 million (15.7 percent), partially offset by an increase of $77 million (5.2 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 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, as well as gains on higher GNMA loan sales. Retail product fees were stronger driven by retail leasing end of term residual gains and deposit service charges increased as a result of customer activity and ATM processing revenue. Total noninterest expense increased $66 million (4.8 percent) primarily due to an increase in net shared services expense due to investments in digital capabilities and higher compensation expense from merit, business hiring related to mortgage forbearance loss mitigation and revenue-related compensation driven by business production. The provision for credit losses decreased $94 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 third quarter of 2021 compared with growth in the third quarter of 2020.

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WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)

($ in millions)				Percent Change
					3Q	2Q	3Q	3Q21 vs	3Q21 vs	YTD	YTD	Percent
					2021	2021	2020	2Q21	3Q20	2021	2020			Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$225	$230	$301	(2.2)	(25.2)			$721	$964			(25.2)
Noninterest income	558	549	505	1.6	10.5			1,638	1,507			8.7
Securities gains (losses), net	--	--	--	--	--			--	--			--
Total net revenue	783	779	806	.5	(2.9)			2,359	2,471			(4.5)
Noninterest expense	507	507	489	--	3.7			1,499	1,445			3.7
Other intangibles	4	4	3	--	33.3			10	9			11.1
Total noninterest expense		511	511	492	--	3.9			1,509	1,454			3.8
Income before provision and taxes		272	268	314	1.5	(13.4)			850	1,017			(16.4)
Provision for credit losses	11	4	11	nm	--			26	34			(23.5)
Income before income taxes		261	264	303	(1.1)	(13.9)			824	983			(16.2)
Income taxes and
taxable-equivalent adjustment	65	66	76	(1.5)	(14.5)			206	246			(16.3)
Net income		196	198	227	(1.0)	(13.7)			618	737			(16.1)
Net (income) loss attributable to
noncontrolling interests	--	--	--	--	--			--	--			--
Net income attributable to U.S. Bancorp		$196	$198	$227	(1.0)	(13.7)			$618	$737			(16.1)
Average Balance Sheet Data
Loans	$18,454	$17,436	$15,616	5.8	18.2			$17,584	$15,151			16.1
Other earning assets	225	237	288	(5.1)	(21.9)			247	285			(13.3)
Goodwill	1,618	1,618	1,618	--	--			1,618	1,617			.1
Other intangible assets	80	84	37	(4.8)	nm	69	40			72.5
Assets	21,566	20,396	18,708	5.7	15.3			20,676	18,324			12.8
Noninterest-bearing deposits	24,453	23,249	17,719	5.2	38.0			23,024	16,285			41.4
Interest-bearing deposits	71,841	73,107	73,857	(1.7)	(2.7)			76,098	76,736			(.8)
Total deposits		96,294	96,356	91,576	(.1)	5.2			99,122	93,021			6.6
Total U.S. Bancorp shareholders' equity	3,172	3,089	2,968	2.7	6.9			3,099	2,924			6.0
(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 $196 million of the Company's net income in the third quarter of 2021, compared with $227 million in the third quarter of 2020. Total net revenue was lower by $23 million (2.9 percent) year-over-year reflecting a decrease in net interest income of $76 million (25.2 percent), partially offset by an increase of $53 million (10.5 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 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 $19 million (3.9 percent) compared with the third 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, partially offset by lower other noninterest expense due to the allocation to the business line of previously reserved legal matters in the third quarter of 2020. The provision for credit losses was flat to the third quarter of 2020 reflecting stable credit quality in the current quarter, compared with credit quality deterioration in the third quarter of 2020 offset by stronger balance growth in the current period compared with the prior year quarter.

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