U.S. Bancorp 8K Reports Second Quarter 2021 Results | USB 15 Jul 21

Exhibit 99.1

LOGO

U.S. Bancorp Reports Second Quarter 2021 Results

• Net income of $2.0 billion and net revenue of $5.8 billion

• Return on average assets of 1.44% and return on average common equity of 16.3%

• Common Equity Tier 1 capital ratio of 9.9% and strong levels of liquidity

2Q21 Key Financial Data

2Q21 Highlights



PROFITABILITY METRICS	2Q21	1Q21	2Q20	• Net income of $1,982 million and diluted earnings per common share of $1.28 • Return on average assets of 1.44% and return on average common equity of 16.3% • Net revenue of $5,783 million, including $3,164 million of net interest income and $2,619 million of noninterest income • Returned 79% of 2Q earnings to shareholders through dividends and share buybacks • Average total earning assets growth of 1.3% year-over-year • Average total deposits growth of 6.4% year-over-year • Net charge-off ratio of 0.25% in 2Q21 compared with 0.31% in 1Q21 and 0.55% in 2Q20 • Allowance for credit losses declined $350 million during the quarter given improving economic outlook and credit trends • Nonperforming assets decreased 11.9% on a linked quarter basis and 9.7% year-over year • CET1 capital ratio increased to 9.9% at June 30, 2021, compared with 9.0% at June 30, 2020
Return on average assets (%)	1.44	1.69	.51
Return on average common equity (%)	16.3	19.0	5.3
Return on tangible common equity (%) (a)	20.9	24.3	7.1
Net interest margin (%)	2.53	2.50	2.62
Efficiency ratio (%) (a)	59.0	62.1	57.6
INCOME STATEMENT (b)	2Q21	1Q21	2Q20
Net interest income (taxable-equivalent basis)	$3,164	$3,089	$3,224
Noninterest income	$2,619	$2,381	$2,614
Net income attributable to U.S. Bancorp	$1,982	$2,280	$689
Diluted earnings per common share	$1.28	$1.45	$.41
Dividends declared per common share	$.42	$.42	$.42
BALANCE SHEET (b)	2Q21	1Q20	2Q20
Average total loans	$294,284	$293,989	$318,107
Average total deposits	$429,210	$426,364	$403,303
Net charge-off ratio	.25%	.31%	.55%
Book value per common share (period end)	$31.74	$30.53	$30.46
Basel III standardized CET1 (c)	9.9%	9.9%	9.0%

(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

CEO Commentary

“Our second quarter results were indicative of steadily improving economic conditions and continued execution of our strategic growth plan across our business lines and markets. As of late June, total sales volumes for each of our three payments businesses exceeded 2019 levels for the first time since the beginning of the pandemic. For a second consecutive quarter, credit quality was better than expected as our net charge-off ratio set another record low. Our capital and liquidity positions remain strong and following the results of the Federal Reserve’s stress test in late June we announced that we will recommend that our Board of Directors approve a 9.5% increase in our common dividend payable in the third quarter. As we head into the second half of 2021, we are well positioned to benefit from improving economic conditions; however, we are even more excited about the significant secular growth opportunities we see driving industry leading returns over the longer term. I want to thank our employees for their continued dedication to help our clients, communities, and shareholders.”

— Andy Cecere, Chairman, President and CEO, U.S. Bancorp

In the Spotlight

2021 Annual Stress Test

The Company’s results for the 2021 stress test reflected a strong financial profile and well-established financial discipline which allowed the Company to maintain strong capital and liquidity positions throughout the recent adverse economic conditions. Based on the stress test results, the Company will be subject to a stress capital buffer of 2.5 percent for the period beginning October 1, 2021 and ending on September 30, 2022. As a result, the Company will recommend that its Board of Directors approve a 9.5 percent increase to its third quarter dividend payable in October 2021.

Focus on Diversity, Equity and Inclusion

U.S. Bank has again been named to DiversityInc’s list of Top 50 Companies for Diversity. The company ranked No. 18 (up from No. 40 last year) on the overall Top 50 List, tying for the largest jump on the list in 2021. The assessment collects data across six key areas: Leadership Accountability, Human Capital Diversity Metrics, Talent Programs, Workforce Practices, Supplier Diversity, and Philanthropy.

U.S. Bank Access Commitment

U.S. Bank recently established the U.S. Bank Access Fund, a $25 million fund supporting more than 30,000 women of color microbusiness owners over three years, prioritizing Black women business owners. The fund will help sustain and create new job opportunities, provide access to capital, technical assistance and networking opportunities. U.S. Bank leaders will also share expertise with business owners through seminars and roundtables.

U.S. Bank to Acquire the Asset Management Division of PFM

U.S. Bank has entered into a definitive agreement to purchase PFM Asset Management LLC, which is expected to close in the fourth quarter of 2021. Based on March 31, 2021 balances, this transaction will nearly double U.S. Bancorp Asset Management’s market share to more than $325 billion assets under management and administration, increasing U.S. Bank’s presence nationally and solidifying our position as a leading provider of investment solutions.

LOGO

Investor contact: Jennifer Thompson, 612.303.0778 | Media contact: Jeff Shelman, 612.422.1423


		U.S. Bancorp Second Quarter 2021 Results


INCOME STATEMENT HIGHLIGHTS
($ in millions, except per-share data)										Percent Change
	2Q 2021			1Q 2021			2Q 2020			2Q21 vs 1Q21			2Q21 vs 2Q20		YTD 2021			YTD 2020			Percent Change
Net interest income		$3,137			$3,063			$3,200			2.4			(2.0)		$6,200			$6,423			(3.5	)
Taxable-equivalent adjustment		27			26			24			3.8			12.5		53			48			10.4
Net interest income (taxable-equivalent basis)		3,164			3,089			3,224			2.4			(1.9)		6,253			6,471			(3.4	)
Noninterest income		2,619			2,381			2,614			10.0			.2		5,000			5,139			(2.7	)
Total net revenue		5,783			5,470			5,838			5.7			(.9)		11,253			11,610			(3.1	)
Noninterest expense		3,387			3,379			3,318			.2			2.1		6,766			6,634			2.0
Income before provision and income taxes		2,396			2,091			2,520			14.6			(4.9)		4,487			4,976			(9.8	)
Provision for credit losses		(170	)		(827	)		1,737			79.4			nm		(997	)		2,730			nm
Income before taxes		2,566			2,918			783			(12.1	)		nm		5,484			2,246			nm
Income taxes and taxable-equivalent adjustment		578			633			88			(8.7	)		nm		1,211			372			nm
Net income		1,988			2,285			695			(13.0	)		nm		4,273			1,874			nm
Net (income) loss attributable to noncontrolling interests		(6	)		(5	)		(6	)		(20.0	)		--		(11	)		(14	)		21.4
Net income attributable to U.S. Bancorp		$1,982			$2,280			$689			(13.1	)		nm		$4,262			$1,860			nm
Net income applicable to U.S. Bancorp common shareholders		$1,914			$2,175			$614			(12.0	)		nm		$4,089			$1,702			nm
Diluted earnings per common share		$1.28			$1.45			$.41			(11.7	)		nm		$2.73			$1.12			nm

Net income attributable to U.S. Bancorp was $1,982 million for the second quarter of 2021, which was $1,293 million higher than the $689 million for the second quarter of 2020, and $298 million lower than the $2,280 million for the first quarter of 2021. Diluted earnings per common share were $1.28 in the second quarter of 2021, compared with $0.41 in the second quarter of 2020 and $1.45 in the first quarter of 2021.

The increase in net income year-over-year was primarily due to lower provision for credit losses driven by a reserve release as a result of improvement in the global economy combined with government stimulus programs compared with a reserve build during 2020. Net interest income decreased 1.9 percent on a year-over-year taxable-equivalent basis, primarily due to the impact of lower rates compared with a year ago and declining average loan balances, partially offset by the benefit of deposit and funding mix as well as higher loan fees related to the Small Business Administration (“SBA”) Paycheck Protection Program. The net interest margin declined from a year ago to 2.53 percent in the second quarter of 2021 primarily due to the mix of earning assets and higher premium amortization within the investment portfolio, partially offset by the net benefit of funding composition and higher loan fees. Noninterest income increased 0.2 percent compared with a year ago driven by improvements in payment services revenue, deposit service charges, and other noninterest income, mostly offset by lower commercial products revenue, mortgage banking revenue, and securities gains. Noninterest expense increased 2.1 percent reflecting increases in personnel expense, primarily related to performance-based incentive compensation and employee benefits expense driven by substantially improving financial results, as well as higher marketing and business development expense and technology and communications expense, partially offset by lower net occupancy and equipment expense and other noninterest expense.

Net income decreased on a linked quarter basis primarily due to higher provision for credit losses as a result of a larger reserve release in the first quarter of 2021, partially offset by 5.7 percent growth in total revenue including increasing net interest income and stronger noninterest income. Net interest income on a taxable-equivalent basis increased 2.4 percent primarily due to higher yields and volumes in the investment portfolio, favorable earning asset mix, higher loan fees, one more day in the quarter, and favorable deposit and funding mix, partially offset by lower loan yields. The net interest margin increased on a linked quarter basis primarily reflecting changes in the investment portfolio mix, favorable funding and deposit mix, and higher loan fees, partially offset by lower loan yields. Noninterest income increased 10.0 percent compared with the first quarter of 2021 driven by increases in payment services revenue, mortgage banking revenue, securities gains, and other noninterest income. Noninterest expense was relatively flat on a linked quarter basis reflecting costs of investments in marketing and business development expense offset by lower personnel expense.

LOGO


		U.S. Bancorp Second Quarter 2021 Results


NET INTEREST INCOME
(Taxable-equivalent basis; $ in millions)							Change
	2Q 2021		1Q 2021		2Q 2020		2Q21 vs 1Q21		2Q21 vs 2Q20		YTD 2021		YTD 2020		Change
Components of net interest income
Income on earning assets		$3,409		$3,367		$3,697		$42		$(288)		$6,776		$7,839		$(1,063)
Expense on interest-bearing liabilities		245		278		473		(33)		(228)		523		1,368		(845)
Net interest income		$3,164		$3,089		$3,224		$75		$(60)		$6,253		$6,471		$(218)

Average yields and rates paid
Earning assets yield		2.73%		2.73%		3.00%		--%		(.27)%		2.73%		3.34%		(.61)%
Rate paid on interest-bearing liabilities		.28		.31		.50		(.03)		(.22)		.29		.75		(.46)
Gross interest margin		2.45%		2.42%		2.50%		.03%		(.05)%		2.44%		2.59%		(.15)%
Net interest margin		2.53%		2.50%		2.62%		.03%		(.09)%		2.52%		2.76%		(.24)%

Average balances
Investment securities (a)		$160,615		$145,520		$120,867		$15,095		$39,748		$153,109		$120,856		$32,253
Loans		294,284		293,989		318,107		295		(23,823)		294,138		307,882		(13,744)
Earning assets		500,751		497,711		494,119		3,040		6,632		499,239		470,921		28,318
Interest-bearing liabilities		356,565		360,582		380,320		(4,017)		(23,755)		358,562		366,540		(7,978)

(a) Excludes unrealized gain (loss)

Net interest income on a taxable-equivalent basis in the second quarter of 2021 was $3,164 million, a decrease of $60 million (1.9 percent) compared with the second quarter of 2020. The decrease was primarily due to the impact of lower rates compared with a year ago and lower loan volumes, partially offset by the benefit of deposit and funding mix as well as higher loan fees. Average earning assets were $6.6 billion (1.3 percent) higher than the second quarter of 2020, reflecting an increase of $39.7 billion (32.9 percent) in average investment securities, while average total loans decreased $23.8 billion (7.5 percent) due to continued paydowns by corporate customers that accessed the capital markets last year and average other earning assets decreased $10.8 billion (22.1 percent) primarily driven by lower cash balances as the Company continues to purchase mortgage-backed, U.S. Treasury and state and political securities.

Net interest income on a taxable-equivalent basis increased $75 million (2.4 percent) on a linked quarter basis primarily due to higher yields and volumes in the investment portfolio, favorable earning asset mix, higher loan fees, one more day in the quarter, and favorable deposit and funding mix, partially offset by lower loan yields. Average earning assets were $3.0 billion (0.6 percent) higher on a linked quarter basis, reflecting increases of $15.1 billion (10.4 percent) in average investment securities and a slight increase in average loans, partially offset by a decrease of $10.1 billion (21.1 percent) in average other earning assets driven by lower cash balances as the Company deployed liquidity to purchase mortgage-backed, U.S. Treasury and state and political securities.

The net interest margin in the second quarter of 2021 was 2.53 percent, compared with 2.62 percent in the second quarter of 2020 and 2.50 percent in the first quarter of 2021. The decrease in the net interest margin from the prior year was primarily due to the mix of earning assets and higher premium amortization within the investment portfolio, partially offset by the net benefit of funding composition and higher loan fees. The increase in the net interest margin on a linked quarter basis reflected changes in the investment portfolio mix, favorable funding and deposit mix, and higher loan fees, partially offset by lower loan yields.

The increase in average investment securities on a year-over-year and linked quarter basis was due to purchases of mortgage-backed, U.S. Treasury and state and political securities, net of prepayments and maturities.

LOGO


		U.S. Bancorp Second Quarter 2021 Results


AVERAGE LOANS
($ in millions)							Percent Change
	2Q 2021		1Q 2021		2Q 2020		2Q21 vs 1Q21			2Q21 vs 2Q20			YTD 2021		YTD 2020		Percent Change

Commercial		$97,713		$96,757		$122,442		1.0			(20.2)			$97,237		$111,385		(12.7)
Lease financing		5,261		5,334		5,597		(1.4	)		(6.0	)		5,298		5,628		(5.9)
Total commercial		102,974		102,091		128,039		.9			(19.6	)		102,535		117,013		(12.4)

Commercial mortgages		27,721		27,968		30,194		(.9	)		(8.2	)		27,844		29,858		(6.7)
Construction and development		10,843		10,818		10,894		.2			(.5	)		10,831		10,725		1.0
Total commercial real estate		38,564		38,786		41,088		(.6	)		(6.1	)		38,675		40,583		(4.7)

Residential mortgages		73,351		75,201		71,122		(2.5	)		3.1			74,271		71,007		4.6

Credit card		21,116		21,144		21,510		(.1	)		(1.8	)		21,130		22,673		(6.8)

Retail leasing		7,873		7,975		8,412		(1.3	)		(6.4	)		7,924		8,443		(6.1)
Home equity and second mortgages		11,368		12,062		14,386		(5.8	)		(21.0	)		11,713		14,612		(19.8)
Other		39,038		36,730		33,550		6.3			16.4			37,890		33,551		12.9
Total other retail		58,279		56,767		56,348		2.7			3.4			57,527		56,606		1.6

Total loans		$294,284		$293,989		$318,107		.1			(7.5	)		$294,138		$307,882		(4.5)

Average total loans for the second quarter of 2021 were $23.8 billion (7.5 percent) lower than the second quarter of 2020. The decrease was primarily due to lower total commercial loans (19.6 percent) driven by continued paydowns by corporate customers that accessed the capital markets last year, lower home equity and second mortgages (21.0 percent) as more customers chose to refinance their existing first lien residential mortgage balances during the prior year due to the low interest rate environment, and lower total commercial real estate (6.1 percent) as a result of paydowns. These decreases were partially offset by growth in residential mortgages (3.1 percent) driven by loan repurchases from the Government National Mortgage Association (“GNMA”), as well as growth in other retail loans (16.4 percent) driven by growth in installment loans due to the impact of COVID-19 on recreational vehicle sales.

Average total loans were $295 million (0.1 percent) higher than the first quarter of 2021 primarily driven by higher total commercial loans (0.9 percent) and higher other retail loans (6.3 percent) driven by growth in installment loans, partially offset by lower residential mortgages (2.5 percent) as a result of customer paydowns.

LOGO


		U.S. Bancorp Second Quarter 2021 Results


AVERAGE DEPOSITS
($ in millions)							Percent Change
	2Q		1Q		2Q		2Q21 vs			2Q21 vs			YTD		YTD		Percent
	2021		2021		2020		1Q21			2Q20			2021		2020		Change

Noninterest-bearing deposits	$	125,297	$	118,352	$	95,106		5.9			31.7		$	121,844	$	84,624		44.0
Interest-bearing savings deposits
Interest checking		103,356		97,385		83,789		6.1			23.4			100,387		80,573		24.6
Money market savings		113,673		124,825		129,692		(8.9	)		(12.4	)		119,218		125,819		(5.2	)
Savings accounts		62,102		58,848		51,237		5.5			21.2			60,484		49,643		21.8
Total savings deposits		279,131		281,058		264,718		(.7	)		5.4			280,089		256,035		9.4
Time deposits		24,782		26,954		43,479		(8.1	)		(43.0	)		25,862		42,394		(39.0	)
Total interest-bearing deposits		303,913		308,012		308,197		(1.3	)		(1.4	)		305,951		298,429		2.5

Total deposits	$	429,210	$	426,364	$	403,303		.7			6.4		$	427,795	$	383,053		11.7

Average total deposits for the second quarter of 2021 were $25.9 billion (6.4 percent) higher than the second quarter of 2020, including approximately $7 billion related to the acquisition of deposit balances from State Farm Bank in the fourth quarter of 2020. Average noninterest-bearing deposits increased $30.2 billion (31.7 percent) across all business lines. Average total savings deposits were $14.4 billion (5.4 percent) higher year-over-year driven by Consumer and Business Banking. Average time deposits were $18.7 billion (43.0 percent) lower than the prior year quarter primarily within Corporate and Commercial Banking. Changes in time deposits are largely related to those deposits managed as an alternative to other funding sources, based largely on relative pricing and liquidity characteristics.

Average total deposits increased $2.8 billion (0.7 percent) from the first quarter of 2021. On a linked quarter basis, average noninterest-bearing deposits increased $6.9 billion (5.9 percent) driven by Corporate and Commercial Banking, Wealth Management and Investment Services and Consumer and Business Banking. Average total savings deposits decreased $1.9 billion (0.7 percent) compared with the first quarter of 2021 primarily due to decreases in Wealth Management and Investment Services, partially offset by increases in Consumer and Business Banking. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, decreased $2.2 billion (8.1 percent) on a linked quarter basis across all business lines.

The growth in average noninterest-bearing deposits and total average savings deposits year-over-year was primarily a result of the actions by the federal government to increase liquidity in the financial system and government stimulus programs.

LOGO


		U.S. Bancorp Second Quarter 2021 Results


NONINTEREST INCOME
($ in millions)							Percent Change
	2Q		1Q		2Q		2Q21 vs		2Q21 vs			YTD		YTD		Percent
	2021		2021		2020		1Q21		2Q20			2021		2020		Change

Credit and debit card revenue		$396		$336		$284		17.9		39.4			$732		$588		24.5
Corporate payment products revenue		138		126		101		9.5		36.6			264		246		7.3
Merchant processing services		374		318		266		17.6		40.6			692		603		14.8
Trust and investment management fees		446		444		434		.5		2.8			890		861		3.4
Deposit service charges		176		161		133		9.3		32.3			337		342		(1.5	)
Treasury management fees		160		147		137		8.8		16.8			307		280		9.6
Commercial products revenue		280		280		355		--		(21.1	)		560		601		(6.8	)
Mortgage banking revenue		346		299		648		15.7		(46.6	)		645		1,043		(38.2	)
Investment products fees		60		55		45		9.1		33.3			115		94		22.3
Securities gains (losses), net		43		25		81		72.0		(46.9	)		68		131		(48.1	)
Other		200		190		130		5.3		53.8			390		350		11.4

Total noninterest income		$2,619		$2,381		$2,614		10.0		.2			$5,000		$5,139		(2.7	)

Second quarter noninterest income of $2,619 million was $5 million (0.2 percent) higher than the second quarter of 2020. During 2020, payment services revenue had been adversely affected by the impact of the pandemic on consumer and business spending, particularly related to travel and entertainment activities. However, spending has continued to strengthen across most sectors driven by government stimulus, local jurisdictions reducing restrictions and consumer behaviors normalizing. As a result, payments services revenue increased $257 million (39.5 percent) compared with the second quarter of 2020. The components of payments revenue included strong growth in credit and debit card revenue of $112 million (39.4 percent) driven by higher net interchange revenue related to sales volume and prepaid card processing activities related to government stimulus programs as well as stronger transaction and cash advance fees, higher corporate payment products revenue of $37 million (36.6 percent) reflecting improving business spending, and higher merchant processing services revenue of $108 million (40.6 percent) driven by higher sales volume. Deposit service charges increased $43 million (32.3 percent) primarily due to customer activity and ATM processing revenue. Other noninterest income increased $70 million (53.8 percent) primarily due to higher retail leasing end of term residual gains and related fees and higher tax-advantaged investment syndication revenue. Mostly offsetting favorable impacts on noninterest income, mortgage banking revenue decreased $302 million (46.6 percent) driven by lower production volume 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. Commercial products revenue decreased $75 million (21.1 percent) primarily due to lower capital markets activity and trading revenue, partially offset by higher non-yield loan fees as a result of higher unused commitments.

Noninterest income was $238 million (10.0 percent) higher in the second quarter of 2021 compared with the first quarter of 2021. Payment services revenue increased $128 million (16.4 percent) compared with the first quarter of 2021 as the global economy continues to recover from the impacts of the COVID-19 pandemic. Credit and debit card revenue increased $60 million (17.9 percent), corporate payment products revenue increased $12 million (9.5 percent) and merchant processing services increased $56 million (17.6 percent) all primarily driven by higher sales volume. Mortgage banking revenue increased $47 million (15.7 percent) due to the favorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities, partially offset by lower production volume and related gain on sale margins.

LOGO


		U.S. Bancorp Second Quarter 2021 Results


NONINTEREST EXPENSE
($ in millions)							Percent Change
	2Q 2021		1Q 2021		2Q 2020		2Q21 vs 1Q21			2Q21 vs 2Q20			YTD 2021		YTD 2020		Percent Change

Compensation	$	1,798	$	1,803	$	1,685		(.3	)		6.7		$	3,601	$	3,305		9.0
Employee benefits		337		384		314		(12.2	)		7.3			721		666		8.3
Net occupancy and equipment		258		263		271		(1.9	)		(4.8	)		521		547		(4.8	)
Professional services		108		98		106		10.2			1.9			206		205		.5
Marketing and business development		90		48		67		87.5			34.3			138		141		(2.1	)
Technology and communications		362		359		309		.8			17.2			721		598		20.6
Postage, printing and supplies		65		69		72		(5.8	)		(9.7	)		134		144		(6.9	)
Other intangibles		40		38		43		5.3			(7.0	)		78		85		(8.2	)
Other		329		317		451		3.8			(27.1	)		646		943		(31.5	)

Total noninterest expense	$	3,387	$	3,379	$	3,318		.2			2.1		$	6,766	$	6,634		2.0

Second quarter noninterest expense of $3,387 million was $69 million (2.1 percent) higher than the second quarter of 2020 reflecting increases in compensation expense, employee benefits expense, marketing and business development expense, and technology and communications expense, partially offset by lower net occupancy and equipment expense and other noninterest expense. Compensation expense increased $113 million (6.7 percent) compared with the second quarter of 2020 due to performance-based incentives, merit, and revenue-related compensation driven by business production. Employee benefits expense increased $23 million (7.3 percent) primarily due to payroll taxes and related benefits, higher medical claims expense, and higher pension expense. Marketing and business development expense increased $23 million (34.3 percent) due to the timing of marketing campaigns supporting business development. Technology and communications expense increased $53 million (17.2 percent) primarily due to higher call center volume related to prepaid cards and capital expenditures supporting business technology investments. These increases were partially offset by lower net occupancy and equipment expense of $13 million (4.8 percent) primarily due to branch optimization initiatives and lower other noninterest expense of $122 million (27.1 percent) primarily due to higher COVID-19 related accruals in the second quarter of 2020 including recognizing liabilities related to future delivery exposures for merchant and airline processing as well as lower costs related to tax-advantaged projects and lower FDIC insurance expense in the current year quarter.

Noninterest expense increased $8 million (0.2 percent) on a linked quarter basis primarily driven by an increase of $42 million (87.5 percent) in marketing and business development expense primarily due to the timing of marketing campaigns supporting business development. Mostly offsetting unfavorable impacts on noninterest expense, compensation expense decreased $5 million (0.3 percent) driven by the impact of seasonally higher stock-based compensation in the first quarter partially offset by the impact of seasonal merit increases, one additional day in the second quarter, performance-based incentives, and higher variable compensation. Employee benefits decreased $47 million (12.2 percent) driven by higher payroll taxes in the first quarter.

Provision for Income Taxes

The provision for income taxes for the second quarter of 2021 resulted in a tax rate of 22.5 percent on a taxable-equivalent basis (effective tax rate of 21.7 percent), compared with 11.2 percent on a taxable-equivalent basis (effective tax rate of 8.4 percent) in the second quarter of 2020, and a tax rate of 21.7 percent on a taxable-equivalent basis (effective tax rate of 21.0 percent) in the first quarter of 2021. The increase in the tax rate year-over-year was due to the marginal impact of providing taxes on higher pretax earnings in the second quarter of 2021.

LOGO


		U.S. Bancorp Second Quarter 2021 Results


ALLOWANCE FOR CREDIT LOSSES
($ in millions)	2Q 2021			% (a)			1Q 2021			% (a)			4Q 2020			% (a)			3Q 2020			% (a)			2Q 2020			% (a)
Balance, beginning of period	$	6,960					$	8,010					$	8,010					$	7,890					$	6,590
Net charge-offs
Commercial		26			.11			52			.22			142			.56			167			.60			105			.34
Lease financing		1			.08			4			.30			8			.57			11			.78			6			.43

Total commercial		27			.11			56			.22			150			.56			178			.61			111			.35
Commercial mortgages		--			--			(12	)		(.17	)		82			1.12			85			1.13			19			.25
Construction and development		--			--			5			.19			2			.07			(2	)		(.07	)		3			.11

Total commercial real estate		--			--			(7	)		(.07	)		84			.83			83			.81			22			.22
Residential mortgages		(10	)		(.05	)		(5	)		(.03	)		(7	)		(.04	)		(3	)		(.02	)		(3	)		(.02	)

Credit card		148			2.81			144			2.76			165			2.99			201			3.63			229			4.28

Retail leasing		(1	)		(.05	)		1			.05			9			.43			20			.94			33			1.58
Home equity and second mortgages		(3	)		(.11	)		(2	)		(.07	)		(3	)		(.09	)		(2	)		(.06	)		--			--
Other		19			.20			36			.40			43			.48			38			.43			45			.54

Total other retail		15			.10			35			.25			49			.34			56			.39			78			.56

Total net charge-offs		180			.25			223			.31			441			.58			515			.66			437			.55
Provision for credit losses		(170	)					(827	)					441						635						1,737

Balance, end of period	$	6,610					$	6,960					$	8,010					$	8,010					$	7,890

Components
Allowance for loan losses	$	6,026					$	6,343					$	7,314					$	7,407					$	7,383
Liability for unfunded credit commitments		584						617						696						603						507

Total allowance for credit losses	$	6,610					$	6,960					$	8,010					$	8,010					$	7,890

Gross charge-offs	$	314					$	374					$	556					$	611					$	522
Gross recoveries	$	134					$	151					$	115					$	96					$	85

Allowance for credit losses as a percentage of Period-end loans		2.23						2.36						2.69						2.61						2.54
Nonperforming loans		649						617						654						678						737
Nonperforming assets		624						579						617						631						673

(a) Annualized and calculated on average loan balances

LOGO


		U.S. Bancorp Second Quarter 2021 Results

The Company’s provision for credit losses for the second quarter of 2021 was a benefit of $170 million, which was $657 million higher than the prior quarter and $1,907 million lower than the second quarter of 2020. During the first half of 2021, factors affecting economic conditions, including passing of additional government stimulus, widespread vaccine availability in the U.S. and reduced levels of new virus cases, have contributed to an economic recovery. However, rising inflationary concerns and the impact of pandemic stress continue to weigh on select portfolios. In addition to these factors, expected loss estimates considered various factors including customer specific information impacting changes in risk ratings, projected delinquencies and potential effects of diminishing liquidity without support of mortgage forbearance and direct federal stimulus. Currently, consumer credit trends continue to perform better than expected, while select commercial portfolios continue to be monitored for structural shifts associated with the pandemic.

Total net charge-offs in the second quarter of 2021 were $180 million, compared with $223 million in the first quarter of 2021, and $437 million in the second quarter of 2020. The net charge-off ratio was 0.25 percent in the second quarter of 2021, compared with 0.31 percent in the first quarter of 2021 and 0.55 percent in the second quarter of 2020. Net charge-offs decreased $43 million (19.3 percent) compared with the first quarter of 2021 mainly due to lower total commercial and total other retail net charge-offs. Charge-off rates benefitted from improving economic conditions, borrower liquidity and strong asset prices in the market that support repayment and recovery on problem loans. Net charge-offs decreased $257 million (58.8 percent) compared with the second quarter of 2020 reflecting improvement across most loan categories with the largest drivers being total commercial, credit card and total other retail net charge-offs.

The allowance for credit losses was $6,610 million at June 30, 2021, compared with $6,960 million at March 31, 2021, and $7,890 million at June 30, 2020. The decrease on a linked quarter basis was driven by improvement in the global economy and strong portfolio performance compared with the reserve build during 2020 driven by the concerns associated with the economic impact of COVID-19. The ratio of the allowance for credit losses to period-end loans was 2.23 percent at June 30, 2021, compared with 2.36 percent at March 31, 2021, and 2.54 percent at June 30, 2020. The ratio of the allowance for credit losses to nonperforming loans was 649 percent at June 30, 2021, compared with 617 percent at March 31, 2021, and 737 percent at June 30, 2020.

Nonperforming assets were $1,059 million at June 30, 2021, compared with $1,202 million at March 31, 2021, and $1,173 million at June 30, 2020. The ratio of nonperforming assets to loans and other real estate was 0.36 percent at June 30, 2021, compared with 0.41 percent at March 31, 2021, and 0.38 percent at June 30, 2020. The year-over-year decrease in nonperforming assets was primarily due to a decrease in total commercial nonperforming loans, partially offset by an increase in total commercial real estate nonperforming loans. The decrease in nonperforming assets on a linked quarter basis was driven by decreases in the commercial and commercial real estate portfolios. Accruing loans 90 days or more past due were $376 million at June 30, 2021, compared with $476 million at March 31, 2021, and $556 million at June 30, 2020. The Company expects credit quality to return to more normalized levels over time as the economy rebounds and consumer spending resumes. However, some manageable levels of elevated nonperforming assets in certain industries and loan categories impacted by the pandemic may experience longer recovery periods.

LOGO


		U.S. Bancorp Second Quarter 2021 Results



DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES
(Percent)	Jun 30 2021		Mar 31 2021		Dec 31 2020		Sep 30 2020		Jun 30 2020

Delinquent loan ratios - 90 days or more past due excluding nonperforming loans
Commercial		.04		.06		.05		.06		.07
Commercial real estate		.01		.01		.01		--		--
Residential mortgages		.16		.19		.18		.15		.16
Credit card		.70		.95		.88		.91		1.22
Other retail		.10		.12		.15		.14		.16
Total loans		.13		.16		.16		.15		.18

Delinquent loan ratios - 90 days or more past due including nonperforming loans
Commercial		.32		.39		.42		.48		.45
Commercial real estate		.81		.94		1.15		.82		.48
Residential mortgages		.49		.54		.50		.46		.50
Credit card		.70		.95		.88		.91		1.22
Other retail		.39		.42		.42		.40		.48
Total loans		.47		.54		.57		.53		.52


ASSET QUALITY (a)
($ in millions)

	Jun 30 2021		Mar 31 2021		Dec 31 2020		Sep 30 2020		Jun 30 2020
Nonperforming loans
Commercial		$247		$298		$321		$403		$403
Lease financing		44		49		54		56		53
Total commercial		291		347		375		459		456
Commercial mortgages		224		266		411		323		188
Construction and development		88		90		39		7		7
Total commercial real estate		312		356		450		330		195
Residential mortgages		244		253		245		240		242
Credit card		--		--		--		--		--
Other retail		171		172		154		152		178

Total nonperforming loans		1,018		1,128		1,224		1,181		1,071

Other real estate		17		19		24		35		52

Other nonperforming assets		24		55		50		54		50

Total nonperforming assets		$1,059		$1,202		$1,298		$1,270		$1,173

Accruing loans 90 days or more past due		$376		$476		$477		$461		$556

Nonperforming assets to loans plus ORE (%)		.36		.41		.44		.41		.38

(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due

LOGO


		U.S. Bancorp Second Quarter 2021 Results


COMMON SHARES
(Millions)	2Q 2021			1Q 2021			4Q 2020		3Q 2020		2Q 2020
Beginning shares outstanding		1,497			1,507			1,506		1,506		1,506
Shares issued for stock incentive plans, acquisitions and other corporate purposes		1			3			1		--		--
Shares repurchased		(15	)		(13	)		--		--		--

Ending shares outstanding		1,483			1,497			1,507		1,506		1,506


CAPITAL POSITION
($ in millions)	Jun 30			Mar 31			Dec 31			Sep 30			Jun 30
	2021			2021			2020			2020			2020

Total U.S. Bancorp shareholders’ equity	$	53,039		$	51,678		$	53,095		$	52,565		$	51,850

Basel III Standardized Approach (a)
Common equity tier 1 capital	$	39,691		$	39,103		$	38,045		$	37,485		$	36,351
Tier 1 capital		46,103			45,517			44,474			43,916			42,781
Total risk-based capital		53,625			53,625			52,602			52,086			51,457

Common equity tier 1 capital ratio		9.9	%		9.9	%		9.7	%		9.4	%		9.0	%
Tier 1 capital ratio		11.5			11.5			11.3			11.0			10.6
Total risk-based capital ratio		13.4			13.5			13.4			13.1			12.8
Leverage ratio		8.5			8.4			8.3			8.3			8.0

Tangible common equity to tangible assets (b)		6.8			6.6			6.9			7.0			6.7
Tangible common equity to risk-weighted assets (b)		9.3			9.1			9.5			9.3			9.0

Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)		9.5			9.5			9.3			9.0			8.7

(a) Amounts and ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology
(b) See Non-GAAP Financial Measures reconciliation on page 16

Total U.S. Bancorp shareholders’ equity was $53.0 billion at June 30, 2021, compared with $51.7 billion at March 31, 2021, and $51.9 billion at June 30, 2020. The Federal Reserve has announced that the capital restrictions instituted in the third quarter of 2020 in response to the economic uncertainty from the pandemic will expire on June 30, 2021. Based on the results of the 2021 Annual Stress Test, the Company will recommend that its Board of Directors approve a 9.5 percent increase to its third quarter dividend payable in October 2021. The Company’s existing share repurchase program announced in December 2020 which authorizes the repurchase of up to $3.0 billion of its common stock beginning January 1, 2021, remains in effect.

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 9.9 percent at June 30, 2021, and at March 31, 2021, compared with 9.0 percent at June 30, 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 9.5 percent at June 30, 2021, and at March 31, 2021, compared with 8.7 percent at June 30, 2020.

LOGO


		U.S. Bancorp Second Quarter 2021 Results

Investor Conference Call

On Thursday, July 15, 2021, 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 8286744. For those unable to participate during the live call, a recording will be available at approximately 11 a.m. CT on Thursday, July 15 and will be accessible until Thursday, July 22 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 8286744.

About U.S. Bancorp

U.S. Bancorp, with nearly 70,000 employees and $559 billion in assets as of June 30, 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.

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.

LOGO


		U.S. Bancorp Second Quarter 2021 Results

Non-GAAP Financial Measures

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 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.

LOGO


CONSOLIDATED STATEMENT OF INCOME
(Dollars and Shares in Millions, Except Per Share Data)	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited)	2021			2020			2021			2020
Interest Income
Loans		$2,677			$2,949			$5,401			$6,260
Loans held for sale		55			52			122			96
Investment securities		618			630			1,135			1,322
Other interest income		32			41			65			110
Total interest income		3,382			3,672			6,723			7,788
Interest Expense
Deposits		82			194			167			719
Short-term borrowings		18			34			34			105
Long-term debt		145			244			322			541
Total interest expense		245			472			523			1,365
Net interest income		3,137			3,200			6,200			6,423
Provision for credit losses		(170	)		1,737			(997	)		2,730
Net interest income after provision for credit losses		3,307			1,463			7,197			3,693
Noninterest Income
Credit and debit card revenue		396			284			732			588
Corporate payment products revenue		138			101			264			246
Merchant processing services		374			266			692			603
Trust and investment management fees		446			434			890			861
Deposit service charges		176			133			337			342
Treasury management fees		160			137			307			280
Commercial products revenue		280			355			560			601
Mortgage banking revenue		346			648			645			1,043
Investment products fees		60			45			115			94
Securities gains (losses), net		43			81			68			131
Other		200			130			390			350
Total noninterest income		2,619			2,614			5,000			5,139
Noninterest Expense
Compensation		1,798			1,685			3,601			3,305
Employee benefits		337			314			721			666
Net occupancy and equipment		258			271			521			547
Professional services		108			106			206			205
Marketing and business development		90			67			138			141
Technology and communications		362			309			721			598
Postage, printing and supplies		65			72			134			144
Other intangibles		40			43			78			85
Other		329			451			646			943
Total noninterest expense		3,387			3,318			6,766			6,634
Income before income taxes		2,539			759			5,431			2,198
Applicable income taxes		551			64			1,158			324
Net income		1,988			695			4,273			1,874
Net (income) loss attributable to noncontrolling interests		(6	)		(6	)		(11	)		(14	)
Net income attributable to U.S. Bancorp		$1,982			$689			$4,262			$1,860
Net income applicable to U.S. Bancorp common shareholders		$1,914			$614			$4,089			$1,702
Earnings per common share		$1.29			$.41			$2.73			$1.13
Diluted earnings per common share		$1.28			$.41			$2.73			$1.12
Dividends declared per common share		$.42			$.42			$.84			$.84
Average common shares outstanding		1,489			1,506			1,495			1,512
Average diluted common shares outstanding		1,490			1,507			1,497			1,513


CONSOLIDATED ENDING BALANCE SHEET

(Dollars in Millions)	June 30, 2021			December 31, 2020			June 30, 2020
Assets		(Unaudited	)					(Unaudited	)
Cash and due from banks		$44,573			$62,580			$52,392
Available-for-sale investment securities		160,288			136,840			128,120
Loans held for sale		5,856			8,761			8,178
Loans
Commercial		103,521			102,871			120,261
Commercial real estate		38,770			39,311			41,076
Residential mortgages		73,366			76,155			71,329
Credit card		21,816			22,346			21,257
Other retail		59,439			57,024			56,412
Total loans		296,912			297,707			310,335
Less allowance for loan losses		(6,026	)		(7,314	)		(7,383	)
Net loans		290,886			290,393			302,952
Premises and equipment		3,295			3,468			3,616
Goodwill		9,911			9,918			9,842
Other intangible assets		3,363			2,864			2,518
Other assets		40,714			39,081			39,034
Total assets		$558,886			$553,905			$546,652

Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing		135,143			$118,089			$109,723
Interest-bearing		302,039			311,681			303,583
Total deposits		437,182			429,770			413,306
Short-term borrowings		13,413			11,766			20,595
Long-term debt		36,360			41,297			42,579
Other liabilities		18,257			17,347			17,692
Total liabilities		505,212			500,180			494,172
Shareholders’ equity
Preferred stock		5,968			5,983			5,984
Common stock		21			21			21
Capital surplus		8,518			8,511			8,483
Retained earnings		67,039			64,188			62,526
Less treasury stock		(27,305	)		(25,930	)		(25,962	)
Accumulated other comprehensive income (loss)		(1,202	)		322			798
Total U.S. Bancorp shareholders’ equity		53,039			53,095			51,850
Noncontrolling interests		635			630			630
Total equity		53,674			53,725			52,480
Total liabilities and equity		$558,886			$553,905			$546,652


NON-GAAP FINANCIAL MEASURES

(Dollars in Millions, Unaudited)	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Total equity		$53,674			$52,308			$53,725			$53,195			$52,480
Preferred stock		(5,968	)		(5,968	)		(5,983	)		(5,984	)		(5,984	)
Noncontrolling interests		(635	)		(630	)		(630	)		(630	)		(630	)
Goodwill (net of deferred tax liability) (1)		(8,987	)		(8,992	)		(9,014	)		(8,992	)		(8,954	)
Intangible assets, other than mortgage servicing rights		(650	)		(675	)		(654	)		(676	)		(678	)
Tangible common equity (a)		37,434			36,043			37,444			36,913			36,234

Common equity tier 1 capital, determined in accordance with transitional regulatory capital requirements related to the current expected credit losses methodology implementation		39,691			39,103			38,045			37,485			36,351
Adjustments (2)		(1,732	)		(1,732	)		(1,733	)		(1,733	)		(1,702	)
Common equity tier 1 capital, reflecting the full implementation of the current expected credit losses methodology (b)		37,959			37,371			36,312			35,752			34,649

Total assets		558,886			553,375			553,905			540,455			546,652
Goodwill (net of deferred tax liability) (1)		(8,987	)		(8,992	)		(9,014	)		(8,992	)		(8,954	)
Intangible assets, other than mortgage servicing rights		(650	)		(675	)		(654	)		(676	)		(678	)
Tangible assets (c)		549,249			543,708			544,237			530,787			537,020

Risk-weighted assets, determined in accordance with prescribed regulatory capital requirements effective for the Company (d)		401,301*			396,351			393,648			397,657			401,832
Adjustments (3)		(1,027)*			(1,440	)		(1,471	)		(1,449	)		(1,394	)
Risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (e)		400,274*			394,911			392,177			396,208			400,438

Ratios*
Tangible common equity to tangible assets (a)/(c)		6.8	%		6.6	%		6.9	%		7.0	%		6.7	%
Tangible common equity to risk-weighted assets (a)/(d)		9.3			9.1			9.5			9.3			9.0
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)/(e)		9.5			9.5			9.3			9.0			8.7

	Three Months Ended
	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Net income applicable to U.S. Bancorp common shareholders		$1,914			$2,175			$1,425			$1,494			$614
Intangibles amortization (net-of-tax)		32			30			37			35			34
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization		1,946			2,205			1,462			1,529			648
Annualized net income applicable to U.S. Bancorp common shareholders, excluding intangible amortization (f)		7,805			8,943			5,816			6,083			2,606

Average total equity		53,593			53,359			53,801			53,046			52,871
Average preferred stock		(5,968	)		(6,213	)		(6,217	)		(5,984	)		(5,984	)
Average noncontrolling interests		(631	)		(630	)		(630	)		(630	)		(630	)
Average goodwill (net of deferred tax liability) (1)		(9,003	)		(9,010	)		(9,003	)		(8,975	)		(8,960	)
Average intangible assets, other than mortgage servicing rights		(662	)		(649	)		(673	)		(711	)		(706	)
Average tangible common equity (g)		37,329			36,857			37,278			36,746			36,591

Return on tangible common equity (f)/(g)		20.9	%		24.3	%		15.6	%		16.6	%		7.1	%

Net interest income		$3,137			$3,063			$3,175			$3,227			$3,200
Taxable-equivalent adjustment (4)		27			26			26			25			24
Net interest income, on a taxable-equivalent basis		3,164			3,089			3,201			3,252			3,224

Net interest income, on a taxable-equivalent basis (as calculated above)		3,164			3,089			3,201			3,252			3,224
Noninterest income		2,619			2,381			2,550			2,712			2,614
Less: Securities gains (losses), net		43			25			34			12			81
Total net revenue, excluding net securities gains (losses) (h)		5,740			5,445			5,717			5,952			5,757

Noninterest expense (i)		3,387			3,379			3,364			3,371			3,318
Efficiency ratio (i)/(h)		59.0	%		62.1	%		58.8	%		56.6	%		57.6	%

*	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 requirements.

(2)	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.

(3)	Includes the impact of the estimated increase in the allowance for credit losses related to the adoption of the current 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 included for federal income tax purposes.

LOGO


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

Consolidated Company		$1,982		$2,280		$689		(13.1	)		nm			$4,262		$1,860			nm

(a) preliminary data

Lines of Business

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

LOGO


CORPORATE AND COMMERCIAL BANKING (a)
($ in millions)								Percent Change
	2Q 2021		1Q 2021			2Q 2020		2Q21 vs 1Q21			2Q21 vs 2Q20			YTD 2021			YTD 2020		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$683		$672			$878		1.6			(22.2	)		$1,355			$1,663		(18.5	)
Noninterest income		255		259			339		(1.5	)		(24.8	)		514			610		(15.7	)
Securities gains (losses), net		--		--			--		--			--			--			--		--
Total net revenue		938		931			1,217		.8			(22.9	)		1,869			2,273		(17.8	)
Noninterest expense		411		405			430		1.5			(4.4	)		816			873		(6.5	)
Other intangibles		--		--			--		--			--			--			--		--
Total noninterest expense		411		405			430		1.5			(4.4	)		816			873		(6.5	)
Income before provision and taxes		527		526			787		.2			(33.0	)		1,053			1,400		(24.8	)
Provision for credit losses		23		(40	)		22		nm			4.5			(17	)		446		nm
Income before income taxes		504		566			765		(11.0	)		(34.1	)		1,070			954		12.2
Income taxes and taxable-equivalent adjustment		126		142			191		(11.3	)		(34.0	)		268			238		12.6
Net income		378		424			574		(10.8	)		(34.1	)		802			716		12.0
Net (income) loss attributable to noncontrolling interests		--		--			--		--			--			--			--		--
Net income attributable to U.S. Bancorp		$378		$424			$574		(10.8	)		(34.1	)		$802			$716		12.0

Average Balance Sheet Data
Loans		$95,145		$94,866			$122,930		.3			(22.6	)		$95,006			$113,147		(16.0	)
Other earning assets		4,409		4,308			3,847		2.3			14.6			4,359			4,201		3.8
Goodwill		1,647		1,647			1,647		--			--			1,647			1,647		--
Other intangible assets		5		5			6		--			(16.7	)		5			7		(28.6	)
Assets		107,058		107,016			135,484		--			(21.0	)		107,037			125,394		(14.6	)

Noninterest-bearing deposits		54,958		51,074			38,749		7.6			41.8			53,027			34,074		55.6
Interest-bearing deposits		66,023		67,784			95,388		(2.6	)		(30.8	)		66,899			88,034		(24.0	)
Total deposits		120,981		118,858			134,137		1.8			(9.8	)		119,926			122,108		(1.8	)

Total U.S. Bancorp shareholders’ equity		13,200		13,712			15,274		(3.7	)		(13.6	)		13,455			14,631		(8.0	)

(a) preliminary data

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

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

LOGO


CONSUMER AND BUSINESS BANKING (a)
($ in millions)									Percent Change
	2Q 2021			1Q 2021			2Q 2020		2Q21 vs 1Q21			2Q21 vs 2Q20			YTD 2021			YTD 2020		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$1,650			$1,627			$1,475		1.4			11.9			$3,277			$3,007		9.0
Noninterest income		646			578			886		11.8			(27.1	)		1,224			1,607		(23.8	)
Securities gains (losses), net		--			--			--		--			--			--			--		--
Total net revenue		2,296			2,205			2,361		4.1			(2.8	)		4,501			4,614		(2.4	)
Noninterest expense		1,404			1,379			1,372		1.8			2.3			2,783			2,689		3.5
Other intangibles		3			3			4		--			(25.0	)		6			8		(25.0	)
Total noninterest expense		1,407			1,382			1,376		1.8			2.3			2,789			2,697		3.4
Income before provision and taxes		889			823			985		8.0			(9.7	)		1,712			1,917		(10.7	)
Provision for credit losses		(96	)		(44	)		110		nm			nm			(140	)		233		nm
Income before income taxes		985			867			875		13.6			12.6			1,852			1,684		10.0
Income taxes and taxable-equivalent adjustment		246			217			219		13.4			12.3			463			421		10.0
Net income		739			650			656		13.7			12.7			1,389			1,263		10.0
Net (income) loss attributable to noncontrolling interests		--			--			--		--			--			--			--		--
Net income attributable to U.S. Bancorp		$739			$650			$656		13.7			12.7			$1,389			$1,263		10.0

Average Balance Sheet Data
Loans		$152,470			$153,178			$150,210		(.5	)		1.5			$152,822			$148,462		2.9
Other earning assets		8,033			10,203			6,576		(21.3	)		22.2			9,112			5,772		57.9
Goodwill		3,475			3,475			3,475		--			--			3,475			3,525		(1.4	)
Other intangible assets		2,827			2,491			1,935		13.5			46.1			2,660			2,173		22.4
Assets		173,285			175,525			167,514		(1.3	)		3.4			174,399			164,690		5.9

Noninterest-bearing deposits		40,477			39,028			34,499		3.7			17.3			39,757			31,130		27.7
Interest-bearing deposits		174,356			166,707			144,158		4.6			20.9			170,552			138,888		22.8
Total deposits		214,833			205,735			178,657		4.4			20.2			210,309			170,018		23.7

Total U.S. Bancorp shareholders’ equity		13,361			13,561			13,752		(1.5	)		(2.8	)		13,460			13,389		.5

(a) preliminary data

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

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

LOGO


WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)
($ in millions)							Percent Change
	2Q 2021		1Q 2021		2Q 2020		2Q21 vs 1Q21			2Q21 vs 2Q20				YTD 2021		YTD 2020		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$167		$203		$250		(17.7	)		(33.2	)			$370		$534		(30.7	)
Noninterest income		547		531		499		3.0			9.6				1,078		1,001		7.7
Securities gains (losses), net		--		--		--		--			--		��		--		--		--
Total net revenue		714		734		749		(2.7	)		(4.7	)			1,448		1,535		(5.7	)
Noninterest expense		501		479		474		4.6			5.7				980		941		4.1
Other intangibles		4		2		3		nm			33.3				6		6		--
Total noninterest expense		505		481		477		5.0			5.9				986		947		4.1
Income before provision and taxes		209		253		272		(17.4	)		(23.2	)			462		588		(21.4	)
Provision for credit losses		10		8		(2)		25.0			nm				18		21		(14.3	)
Income before income taxes		199		245		274		(18.8	)		(27.4	)			444		567		(21.7	)
Income taxes and taxable-equivalent adjustment		50		61		69		(18.0	)		(27.5	)			111		142		(21.8	)
Net income		149		184		205		(19.0	)		(27.3	)			333		425		(21.6	)
Net (income) loss attributable to noncontrolling interests		--		--		--		--			--				--		--		--
Net income attributable to U.S. Bancorp		$149		$184		$205		(19.0	)		(27.3	)			$333		$425		(21.6	)

Average Balance Sheet Data
Loans		$12,926		$12,446		$11,206		3.9			15.3				$12,688		$10,909		16.3
Other earning assets		237		279		285		(15.1	)		(16.8	)			258		283		(8.8	)
Goodwill		1,618		1,619		1,616		(.1	)		.1				1,618		1,617		.1
Other intangible assets		84		42		40		nm			nm				63		42		50.0
Assets		15,916		15,682		14,335		1.5			11.0				15,800		14,153		11.6

Noninterest-bearing deposits		22,249		20,377		16,396		9.2			35.7				21,318		14,848		43.6
Interest-bearing deposits		61,146		71,766		65,466		(14.8	)		(6.6	)			66,427		67,195		(1.1	)
Total deposits		83,395		92,143		81,862		(9.5	)		1.9				87,745		82,043		7.0

Total U.S. Bancorp shareholders’ equity		2,640		2,574		2,481		2.6			6.4				2,607		2,475		5.3

(a) preliminary data

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

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

LOGO


PAYMENT SERVICES (a)
($ in millions)								Percent Change
	2Q 2021		1Q 2021			2Q 2020		2Q21 vs 1Q21			2Q21 vs 2Q20			YTD 2021		YTD 2020		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$596		$629			$610		(5.2	)		(2.3	)		$1,225		$1,267		(3.3	)
Noninterest income		913		785			658		16.3			38.8			1,698		1,452		16.9
Securities gains (losses), net		--		--			--		--			--			--		--		--
Total net revenue		1,509		1,414			1,268		6.7			19.0			2,923		2,719		7.5
Noninterest expense		794		767			741		3.5			7.2			1,561		1,495		4.4
Other intangibles		33		33			36		--			(8.3	)		66		71		(7.0	)
Total noninterest expense		827		800			777		3.4			6.4			1,627		1,566		3.9
Income before provision and taxes		682		614			491		11.1			38.9			1,296		1,153		12.4
Provision for credit losses		91		(41	)		(31)		nm			nm			50		231		(78.4	)
Income before income taxes		591		655			522		(9.8	)		13.2			1,246		922		35.1
Income taxes and taxable-equivalent adjustment		148		164			131		(9.8	)		13.0			312		231		35.1
Net income		443		491			391		(9.8	)		13.3			934		691		35.2
Net (income) loss attributable to noncontrolling interests		--		--			--		--			--			--		--		--
Net income attributable to U.S. Bancorp		$443		$491			$391		(9.8	)		13.3			$934		$691		35.2
Average Balance Sheet Data
Loans		$30,030		$29,630			$30,321		1.3			(1.0	)		$29,831		$32,005		(6.8	)
Other earning assets		5		5			5		--			--			5		6		(16.7	)
Goodwill		3,177		3,173			3,101		.1			2.5			3,176		2,977		6.7
Other intangible assets		519		544			590		(4.6	)		(12.0	)		531		573		(7.3	)
Assets		35,620		35,095			35,011		1.5			1.7			35,359		36,647		(3.5	)
Noninterest-bearing deposits		5,030		5,264			3,165		(4.4	)		58.9			5,146		2,318		nm
Interest-bearing deposits		141		132			117		6.8			20.5			137		116		18.1
Total deposits		5,171		5,396			3,282		(4.2	)		57.6			5,283		2,434		nm
Total U.S. Bancorp shareholders’ equity		7,413		7,658			6,975		(3.2	)		6.3			7,535		7,042		7.0
(a) preliminary data

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 $443 million of the Company’s net income in the second quarter of 2021, compared with $391 million in the second quarter of 2020. Total net revenue increased $241 million (19.0 percent) primarily due to higher noninterest income of $255 million (38.8 percent), partially offset by slightly lower net interest income of $14 million (2.3 percent). Net interest income decreased primarily due to lower average loan balances partly due to higher credit card payment rates and loan fees, partially offset by higher loan yields and higher deposit balances as a result of state unemployment programs utilizing prepaid debit cards. 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 credit and debit card revenue driven by higher net interchange revenue related to sales volume and prepaid card processing activities related to government stimulus programs as well as stronger transaction and cash advance fees along with higher corporate payment products revenue driven by improving business spending and higher merchant processing services revenue driven by higher sales volume. Total noninterest expense increased $50 million (6.4 percent) reflecting the timing of marketing campaigns and incremental costs related to the prepaid card business. The provision for credit losses increased $122 million primarily due to balance growth in the current period, compared to a decrease in balances in the prior year quarter, partially offset by lower delinquency rates in the second quarter of 2021.

LOGO


TREASURY AND CORPORATE SUPPORT (a)
($ in millions)									Percent Change
	2Q 2021			1Q 2021			2Q 2020		2Q21 vs 1Q21			2Q21 vs 2Q20			YTD 2021			YTD 2020			Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$68			$(42)			$11		nm			nm			$26			$--			nm
Noninterest income		215			203			151		5.9			42.4			418			338			23.7
Securities gains (losses), net		43			25			81		72.0			(46.9	)		68			131			(48.1	)
Total net revenue		326			186			243		75.3			34.2			512			469			9.2
Noninterest expense		237			311			258		(23.8	)		(8.1	)		548			551			(.5	)
Other intangibles		--			--			--		--			--			--			--			--
Total noninterest expense		237			311			258		(23.8	)		(8.1	)		548			551			(.5	)
Income (loss) before provision and taxes		89			(125	)		(15)		nm			nm			(36	)		(82	)		56.1
Provision for credit losses		(198	)		(710	)		1,638		72.1			nm			(908	)		1,799			nm
Income (loss) before income taxes		287			585			(1,653)		(50.9	)		nm			872			(1,881	)		nm
Income taxes and taxable-equivalent adjustment		8			49			(522)		(83.7	)		nm			57			(660	)		nm
Net income (loss)		279			536			(1,131)		(47.9	)		nm			815			(1,221	)		nm
Net (income) loss attributable to noncontrolling interests		(6	)		(5	)		(6)		(20.0	)		--			(11	)		(14	)		21.4
Net income (loss) attributable to U.S. Bancorp		$273			$531			$(1,137)		(48.6	)		nm			$804			$(1,235	)		nm

Average Balance Sheet Data
Loans		$3,713			$3,869			$3,440		(4.0	)		7.9			$3,791			$3,359			12.9
Other earning assets		193,783			188,927			165,299		2.6			17.2			191,367			152,777			25.3
Goodwill		--			--			--		--			--			--			--			--
Other intangible assets		--			--			--		--			--			--			--			--
Assets		219,486			215,416			191,962		1.9			14.3			217,462			178,672			21.7

Noninterest-bearing deposits		2,583			2,609			2,297		(1.0	)		12.5			2,596			2,254			15.2
Interest-bearing deposits		2,247			1,623			3,068		38.4			(26.8	)		1,936			4,196			(53.9	)
Total deposits		4,830			4,232			5,365		14.1			(10.0	)		4,532			6,450			(29.7	)

Total U.S. Bancorp shareholders’ equity		16,348			15,224			13,759		7.4			18.8			15,789			14,156			11.5

(a) preliminary data

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 $273 million of the Company’s net income in the second quarter of 2021, compared with a net loss of $1,137 million in the second quarter of 2020. Total net revenue increased $83 million (34.2 percent) year-over-year due to an increase of $57 million in net interest income and an increase in noninterest income of $26 million (11.2 percent). Net interest income increased primarily due to favorable funding and deposit mix, partially offset by higher premium amortization in the investment portfolio compared with a year ago. Total noninterest income increased primarily due to higher other noninterest income driven by tax-advantaged investment syndication revenue, partially offset by lower securities gains. Total noninterest expense decreased $21 million (8.1 percent) primarily due to lower COVID-19 related accruals compared with the second quarter of 2020 including recognizing liabilities related to future delivery exposures for merchant and airline processing and lower net shared services expense, partially offset by higher compensation expense as a result of merit and performance-based incentives as well as related payroll taxes and benefits. The provision for credit losses decreased $1,836 million reflecting the residual impact of changes in the allowance for credit losses being impacted by deteriorating economic conditions in the second quarter of 2020 compared to 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.

LOGO

U.S. Bancorp (USB) 8-KU.S. Bancorp Reports Second Quarter 2021 Results