8-K
US Bancorp De (USB)
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<br>symbol | Name of each exchange<br>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<br>Controller |
DATE: January 19, 2022
EX-99.1
Exhibit 99.1
| U.S. Bancorp Reports Fourth Quarterand Full Year 2021 Results<br> <br><br> <br>• Full year net income of $8.0 billion and full year net revenue of $22.8 billion<br><br><br>• Full year return on average assets of<br>1.43% and return on average common equity of 16.0%<br><br><br>• Common Equity Tier 1 capital ratio of<br>10.0% and strong levels of liquidity | ||||
|---|---|---|---|---|
| 4Q21 and Full Year Key Financial Data | 4Q21 and Full YearHighlights | |||
| --- | --- | |||
| PROFITABILITYMETRICS | 4Q21 | 3Q21 | 4Q20 | Full Year<br>2020 |
| --- | --- | --- | --- | --- |
| Return on average assets (%) | 1.16 | 1.45 | 1.10 | .93 |
| Return on average common<br>equity (%) | 13.0 | 15.9 | 12.1 | 10.0 |
| Return on tangible common<br>equity (%) (a) | 16.6 | 20.2 | 15.6 | 13.2 |
| Net interest margin (%) | 2.40 | 2.53 | 2.57 | 2.68 |
| Efficiency ratio (%) (a) | 62.3 | 58.4 | 58.8 | 57.8 |
| INCOME STATEMENT (b) | 4Q21 | 3Q21 | 4Q20 | Full Year<br>2020 |
| Net interest income (taxable-equivalent basis) | $3,150 | $3,197 | 3,201 | $12,924 |
| Noninterest income | $2,534 | $2,693 | 2,550 | $10,401 |
| Net income attributable to U.S. Bancorp | $1,673 | $2,028 | 1,519 | $4,959 |
| Diluted earnings per common share | $1.07 | $1.30 | .95 | $3.06 |
| Dividends declared per common share | $.46 | $.46 | .42 | $1.68 |
| BALANCE SHEET (b) | 4Q21 | 3Q21 | 4Q20 | Full Year<br>2020 |
| Average total loans | $302,755 | $296,739 | 302,308 | $307,269 |
| Average total deposits | $449,838 | $431,487 | 422,413 | $398,615 |
| Net charge-off ratio | .17% | .20% | .58% | .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 |
All values are in US Dollars.
| • Net income of $1,673 million and diluted earnings<br>per common share of $1.07 for 4Q21<br> <br><br> <br>• Return on average assets of 1.16% and return on average common equity of 13.0% for 4Q21<br> <br><br><br><br>• Net revenue decline driven by lower mortgage banking<br>revenue, partially offset by higher trust and investment management fees<br> <br><br><br><br>• Strong deposit growth supported related investment<br>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<br>Program “PPP” loan fees accounted for 6 basis points decline<br> <br><br><br><br>• Net charge-off<br>ratio of 0.17% in 4Q21 compared with 0.20% in 3Q21 and 0.58% in 4Q20<br> <br><br><br><br>• Average total loans grew 2.0% on a linked quarter<br>basis |
|---|
| • Full year net income of $7,963 million and diluted earnings per common share of $5.10<br> <br><br><br><br>• Full year average earning assets growth of 5.1%<br><br><br><br><br><br>• Full year average total deposits growth of 8.9%<br><br><br><br><br><br>• CET1 capital ratio increased to 10.0% at<br>December 31, 2021, compared with 9.7% at December 31, 2020 |
| --- |
| CEOCommentary |
| --- |
“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.
Investor contact: Jennifer Thompson, 612.303.0778 | Media contact: Jeff Shelman, 612.303.9933
| U.S. Bancorp Fourth Quarter 2021 Results | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| INCOME STATEMENT HIGHLIGHTS | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| ( in millions, except per-share data) | Percent Change | ||||||||||||||||
| 3Q<br><br><br>2021 | 4Q<br><br><br>2020 | 4Q21 vs<br><br><br>3Q21 | 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | Full Year<br><br><br>2020 | Percent<br><br><br>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 |
All values are in US Dollars.
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) | ||||||||
| 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) |
All values are in US Dollars.
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) | ||||||||||||
| 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | |||||||||||
| 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) |
All values are in US Dollars.
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 | |||||||||||||||||
| 3Q | 4Q | 4Q21 vs | 4Q21 vs | Full Year | Full Year | Percent | ||||||||||||
| 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 |
All values are in US Dollars.
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) | |||||||||||||
| 4Q21 vs | Full Year | ||||||||||||
| 4Q20 | 2021 | ||||||||||||
| 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 | ) |
All values are in US Dollars.
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.
6
| U.S. Bancorp Fourth Quarter 2021 Results | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NONINTEREST EXPENSE | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| ( in millions) | Percent Change | |||||||||||||||
| 3Q<br><br><br>2021 | 4Q<br><br><br>2020 | 4Q21 vs<br><br><br>3Q21 | 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | ||||||||||||
| 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 |
All values are in US Dollars.
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 $21 million (7.2 percent) primarily due to lower accruals related to future delivery exposures for merchant and airline processing and other accruals, partially offset by seasonally higher amortization of tax-advantaged investments, which were scaled back in 2020 due to the economic environment driven by the pandemic conditions.
Provision for Income Taxes
The provision for income taxes for the fourth quarter of 2021 resulted in a tax rate of 22.5 percent on a taxable-equivalent basis (effective tax rate of 21.5 percent), compared with 21.6 percent on a taxable-equivalent basis (effective tax rate of 20.6 percent) in the fourth quarter of 2020, and a tax rate of 22.5 percent on a taxable-equivalent basis (effective tax rate of 21.7 percent) in the third quarter of 2021.
7
| U.S. Bancorp Fourth Quarter 2021 Results | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ALLOWANCE FOR CREDIT LOSSES | ||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| ($ in millions) | 4Q<br><br><br>2021 | % (a) | 3Q<br><br><br>2021 | % (a) | 2Q<br><br><br>2021 | % (a) | 1Q<br><br><br>2021 | % (a) | 4Q<br><br><br>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<br>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<br>loan balances |
8
| 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.
9
| U.S. Bancorp Fourth Quarter 2021 Results | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Percent) | Dec 31<br><br><br>2021 | Sep 30<br><br><br>2021 | Jun 30<br><br><br>2021 | Mar 31<br><br><br>2021 | Dec 31<br><br><br>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) | ||||||||||
| 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 | $477 | |||||
| Nonperforming assets to loans plus ORE (%) | .28 | .32 | .36 | .41 | .44 | |||||
| (a) Throughout this document, nonperforming assets and<br>related ratios do not include accruing loans 90 days or more past due |
All values are in US Dollars.
10
| U.S. Bancorp Fourth Quarter 2021 Results | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| COMMON SHARES | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (Millions) | 4Q<br><br><br>2021 | 3Q<br><br><br>2021 | 2Q<br><br><br>2021 | 1Q<br><br><br>2021 | 4Q<br><br><br>2020 | ||||||||||
| Beginning shares outstanding | 1,483 | 1,483 | 1,497 | 1,507 | 1,506 | ||||||||||
| Shares issued for stock incentive plans, acquisitions and other corporate purposes | 1 | -- | 1 | 3 | 1 | ||||||||||
| Shares repurchased | -- | -- | (15 | ) | (13 | ) | -- | ||||||||
| Ending shares outstanding | 1,484 | 1,483 | 1,483 | 1,497 | 1,507 | ||||||||||
| CAPITAL POSITION | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| ($ 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 currentexpected 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<br>related to the current expected credit losses methodology | |||||||||||||||
| (b) See Non-GAAP Financial Measures reconciliation on page<br>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.
11
| 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.
12
| 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 FinancialMeasures |
|---|
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<br>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.
13
| CONSOLIDATED STATEMENT OF INCOME | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Millions, Except Per Share Data) | Three Months Ended <br>December 31, | Year Ended<br><br><br>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 |
All values are in US Dollars.
14
| CONSOLIDATED ENDING BALANCE SHEET | ||||
|---|---|---|---|---|
| (Dollars in Millions) | December 31,<br>2021 | December 31,<br>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 |
All values are in US Dollars.
15
| NON-GAAP FINANCIAL MEASURES | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions, Unaudited) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>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<br>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<br>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<br>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<br>losses<br>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<br>expected credit losses methodology (b)/(e) | 9.6 | 9.7 | 9.5 | 9.5 | 9.3 | |||||
| Three Months Ended | ||||||||||
| December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||
| Net income applicable to U.S. Bancorp common shareholders | 1,582 | 1,934 | 1,914 | 2,175 | 1,425 | |||||
| Intangibles amortization<br>(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<br>amortization<br>(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 |
All values are in US Dollars.
| * | 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<br>requirements. |
| --- | --- |
| (2) | Includes the estimated increase in the allowance for credit losses related to the adoption of the current expected<br>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<br>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<br>included for federal income tax purposes. |
| --- | --- |
16
| NON-GAAP FINANCIAL MEASURES | ||||
|---|---|---|---|---|
| Year Ended | ||||
| (Dollars in Millions, Unaudited) | December 31,<br>2021 | December 31,<br>2020 | ||
| Net income applicable to U.S. Bancorp common shareholders | 7,605 | 4,621 | ||
| Intangibles amortization<br>(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 |
All values are in US Dollars.
| (1) | Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory<br>requirements. |
|---|---|
| (2) | Based on a federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not<br>included for federal income tax purposes. |
| --- | --- |
17
| LINE OF BUSINESS FINANCIAL PERFORMANCE(a) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions) | Net Income Attributable | Net Income Attributable | |||||||||||||
| to U.S. Bancorp | to U.S. Bancorp | ||||||||||||||
| Business Line | 4Q<br><br><br>2021 | 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | Percent<br><br><br>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<br>data |
All values are in US Dollars.
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) | |||||||||||||
| 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | ||||||||||||
| Condensed Income Statement | |||||||||||||
| Net interest income (taxable-equivalent<br>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<br>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<br>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’<br>equity | 13,711 | 13,780 | 14,642 | (.5 | ) | (6.4 | ) | 13,928 | 15,063 | (7.5 | ) | ||
| (a) preliminary data |
All values are in US Dollars.
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.
3
| CONSUMER AND BUSINESS BANKING (a) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ( in millions) | ||||||||||||||||
| 3Q<br><br><br>2021 | 4Q<br><br><br>2020 | 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | Full Year<br><br><br>2020 | ||||||||||||
| Condensed Income Statement | ||||||||||||||||
| Net interest income (taxable-equivalent<br>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<br>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<br>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<br>data |
All values are in US Dollars.
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.
4
| WEALTH MANAGEMENT AND INVESTMENT SERVICES (a) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ( in millions) | |||||||||||||
| 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | ||||||||||||
| Condensed Income Statement | |||||||||||||
| Net interest income (taxable-equivalent<br>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<br>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<br>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’<br>equity | 3,318 | 3,172 | 2,973 | 4.6 | 11.6 | 3,154 | 2,936 | 7.4 | |||||
| (a) preliminary<br>data |
All values are in US Dollars.
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.
5
| PAYMENT SERVICES (a) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ( in millions) | |||||||||||||
| 4Q21 vs<br><br><br>4Q20 | Full Year<br><br><br>2021 | ||||||||||||
| Condensed Income Statement | |||||||||||||
| Net interest income (taxable-equivalent<br>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<br>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<br>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’<br>equity | 7,936 | 7,561 | 8,039 | 5.0 | (1.3 | ) | 7,643 | 7,462 | 2.4 | ||||
| (a) preliminary<br>data |
All values are in US Dollars.
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.
6
| TREASURY AND CORPORATE SUPPORT<br>(a) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ( in millions) | |||||||||||||||||
| 3Q<br><br><br>2021 | 4Q<br><br><br>2020 | 4Q21 vs4Q20 | Full Year<br><br><br>2021 | Full Year<br><br><br>2020 | Percent<br><br><br>Change | ||||||||||||
| Condensed Income Statement | |||||||||||||||||
| Net interest income (taxable-equivalent<br>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<br>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<br>interests | (5 | (6 | (6) | 16.7 | 16.7 | (22 | (26 | 15.4 | |||||||||
| Net income (loss) attributable to U.S.<br>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’<br>equity | 18,045 | 17,490 | 14,947 | 3.2 | 20.7 | 16,748 | 14,046 | 19.2 | |||||||||
| (a) preliminary<br>data |
All values are in US Dollars.
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.
7
EX-99.2
U.S. Bancorp 4Q21 Earnings Conference Call January 19, 2022 Exhibit 99.2
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.
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
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
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
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
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
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
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%
Earnings Summary
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
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
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).
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
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
Appendix
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)
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 $37.4 billion, or 9.6%
Credit Quality – Commercial Average Loans ($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%
$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
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 ($0.8 billion or 10.0% of GNMA loans in 4Q21)
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm4Q203Q214Q21 Average Loans$21,937 $21,905$22,399 30-89 Delinquencies1.04% 0.83%0.86% 90+ Delinquencies0.88%0.66%0.73% Nonperforming Loans- %- %- % Linked Quarter Growth (0.5%) (3.6%) (0.1%) 3.7% 2.3% Linked quarter loan growth in 4Q21 driven by increase in consumer spending due to seasonality Net charge-off ratio remained low during the quarter due to the lingering effects of federal stimulus programs and changes in consumer behavior due to the pandemic
Credit Quality – Other Retail Average Loans ($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%
Non-GAAP Financial Measures (4) – see slide 27 for corresponding notes
Non-GAAP Financial Measures (1) – see slide 27 for corresponding notes
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
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.
U.S. Bancorp 4Q21 Earnings Conference Call January 19, 2022