☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware |
41-0255900 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading symbols |
Name of each exchange 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 | ||
Depositary Shares (each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred Stock, par value $1.00) |
USB PrS | New York Stock Exchange | ||
0.850% Medium-Term Notes, Series X (Senior), due June 7, 2024 |
USB/24B | New York Stock Exchange |
Large accelerated file r ☑ |
Accelerated filer ☐ | |
Non-accelerated filer ☐ |
Smaller reporting company ☐ Emerging growth company ☐ |
Class | Outstanding as of July 31, 2022 | |
Common Stock, $0.01 Par Value | 1,485,784,028 shares |
Part I — Financial Information |
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78 |
U.S. Bancorp | 1 |
2 |
U.S. Bancorp |
Table 1 |
Selected Financial Data |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||
(Dollars and Shares in Millions, Except Per Share Data) | 2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
||||||||||||||||||
Condensed Income Statement |
|
|||||||||||||||||||||||
Net interest income |
$ | 3,435 | $ | 3,137 | 9.5 | % | $ | 6,608 | $ | 6,200 | 6.6 | % | ||||||||||||
Taxable-equivalent adjustment (a) |
29 | 27 | 7.4 | 56 | 53 | 5.7 | ||||||||||||||||||
Net interest income (taxable-equivalent basis) (b) |
3,464 | 3,164 | 9.5 | 6,664 | 6,253 | 6.6 | ||||||||||||||||||
Noninterest income |
2,548 | 2,619 | (2.7 | ) | 4,944 | 5,000 | (1.1 | ) | ||||||||||||||||
Total net revenue |
6,012 | 5,783 | 4.0 | 11,608 | 11,253 | 3.2 | ||||||||||||||||||
Noninterest expense |
3,724 | 3,387 | 9.9 | 7,226 | 6,766 | 6.8 | ||||||||||||||||||
Provision for credit losses |
311 | (170 | ) | * | 423 | (997 | ) | * | ||||||||||||||||
Income before taxes |
1,977 | 2,566 | (23.0 | ) | 3,959 | 5,484 | (27.8 | ) | ||||||||||||||||
Income taxes and taxable-equivalent adjustment |
443 | 578 | (23.4 | ) | 867 | 1,211 | (28.4 | ) | ||||||||||||||||
Net income |
1,534 | 1,988 | (22.8 | ) | 3,092 | 4,273 | (27.6 | ) | ||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
(3 | ) | (6 | ) | 50.0 | (4 | ) | (11 | ) | 63.6 | ||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 1,531 | $ | 1,982 | (22.8 | ) | $ | 3,088 | $ | 4,262 | (27.5 | ) | ||||||||||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 1,464 | $ | 1,914 | (23.5 | ) | $ | 2,930 | $ | 4,089 | (28.3 | ) | ||||||||||||
Per Common Share |
|
|||||||||||||||||||||||
Earnings per share |
$ | .99 | $ | 1.29 | (23.3 | )% | $ | 1.97 | $ | 2.73 | (27.8 | )% | ||||||||||||
Diluted earnings per share |
.99 | 1.28 | (22.7 | ) | 1.97 | 2.73 | (27.8 | ) | ||||||||||||||||
Dividends declared per share |
.46 | .42 | 9.5 | .92 | .84 | 9.5 | ||||||||||||||||||
Book value per share (c) |
28.13 | 31.74 | (11.4 | ) | ||||||||||||||||||||
Market value per share |
46.02 | 56.97 | (19.2 | ) | ||||||||||||||||||||
Average common shares outstanding |
1,486 | 1,489 | (.2 | ) | 1,485 | 1,495 | (.7 | ) | ||||||||||||||||
Average diluted common shares outstanding |
1,487 | 1,490 | (.2 | ) | 1,486 | 1,497 | (.7 | ) | ||||||||||||||||
Financial Ratios |
||||||||||||||||||||||||
Return on average assets |
1.06 | % | 1.44 | % | 1.08 | % | 1.56 | % | ||||||||||||||||
Return on average common equity |
13.9 | 16.3 | 13.3 | 17.6 | ||||||||||||||||||||
Net interest margin (taxable-equivalent basis) (a) |
2.59 | 2.53 | 2.51 | 2.52 | ||||||||||||||||||||
Efficiency ratio (b) |
62.1 | 59.0 | 62.4 | 60.5 | ||||||||||||||||||||
Net charge-offs as a percent of average loans outstanding |
.20 | .25 | .20 | .28 | ||||||||||||||||||||
Average Balances |
|
|||||||||||||||||||||||
Loans |
$ | 324,187 | $ | 294,284 | 10.2 | % | $ | 318,608 | $ | 294,138 | 8.3 | % | ||||||||||||
Loans held for sale |
3,688 | 7,825 | (52.9 | ) | 4,579 | 8,922 | (48.7 | ) | ||||||||||||||||
Investment securities (d) |
171,296 | 160,615 | 6.7 | 173,019 | 153,109 | 13.0 | ||||||||||||||||||
Earning assets |
536,761 | 500,751 | 7.2 | 533,318 | 499,239 | 6.8 | ||||||||||||||||||
Assets |
579,911 | 551,365 | 5.2 | 578,663 | 550,057 | 5.2 | ||||||||||||||||||
Noninterest-bearing deposits |
120,827 | 125,297 | (3.6 | ) | 124,375 | 121,844 | 2.1 | |||||||||||||||||
Deposits |
456,516 | 429,210 | 6.4 | 455,352 | 427,795 | 6.4 | ||||||||||||||||||
Short-term borrowings |
23,294 | 16,462 | 41.5 | 21,178 | 14,794 | 43.2 | ||||||||||||||||||
Long-term debt |
31,390 | 36,190 | (13.3 | ) | 32,177 | 37,817 | (14.9 | ) | ||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
49,166 | 52,962 | (7.2 | ) | 51,304 | 52,846 | (2.9 | ) | ||||||||||||||||
June 30, 2022 |
December 31, 2021 |
|||||||||||||||||||||||
Period End Balances |
|
|||||||||||||||||||||||
Loans |
$ | 332,369 | $ | 312,028 | 6.5 | % | ||||||||||||||||||
Investment securities |
160,309 | 174,821 | (8.3 | ) | ||||||||||||||||||||
Assets |
591,381 | 573,284 | 3.2 | |||||||||||||||||||||
Deposits |
467,102 | 456,083 | 2.4 | |||||||||||||||||||||
Long-term debt |
29,408 | 32,125 | (8.5 | ) | ||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
48,605 | 54,918 | (11.5 | ) | ||||||||||||||||||||
Asset Quality |
||||||||||||||||||||||||
Nonperforming assets |
$ | 770 | $ | 878 | (12.3 | )% | ||||||||||||||||||
Allowance for credit losses |
6,255 | 6,155 | 1.6 | |||||||||||||||||||||
Allowance for credit losses as a percentage of period-end loans |
1.88 | % | 1.97 | % | ||||||||||||||||||||
Capital Ratios |
||||||||||||||||||||||||
Common equity tier 1 capital |
9.7 | % | 10.0 | % | ||||||||||||||||||||
Tier 1 capital |
11.4 | 11.6 | ||||||||||||||||||||||
Total risk-based capital |
13.2 | 13.4 | ||||||||||||||||||||||
Leverage |
8.6 | 8.6 | ||||||||||||||||||||||
Total leverage exposure |
7.1 | 6.9 | ||||||||||||||||||||||
Tangible common equity to tangible assets (b) |
5.5 | 6.8 | ||||||||||||||||||||||
Tangible common equity to risk-weighted assets (b) |
7.2 | 9.2 | ||||||||||||||||||||||
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b) |
9.4 | 9.6 |
* |
Not meaningful |
(a) |
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. |
(b) |
See Non-GAAP Financial Measures beginning on page 31. |
(c) |
Calculated as U.S. Bancorp common shareholders’ equity divided by common shares outstanding at end of the period. |
(d) |
Excludes unrealized gains and losses on available-for-sale available-for-sale held-to-maturity. |
U.S. Bancorp | 3 |
4 |
U.S. Bancorp |
U.S. Bancorp | 5 |
Table 2 |
Noninterest Income |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
||||||||||||||||||
Credit and debit card revenue |
$ | 399 | $ | 396 | .8 | % | $ | 737 | $ | 732 | .7 | % | ||||||||||||
Corporate payment products revenue |
172 | 138 | 24.6 | 330 | 264 | 25.0 | ||||||||||||||||||
Merchant processing services |
425 | 374 | 13.6 | 788 | 692 | 13.9 | ||||||||||||||||||
Trust and investment management fees |
566 | 446 | 26.9 | 1,066 | 890 | 19.8 | ||||||||||||||||||
Deposit service charges |
165 | 176 | (6.3 | ) | 342 | 337 | 1.5 | |||||||||||||||||
Treasury management fees |
169 | 160 | 5.6 | 325 | 307 | 5.9 | ||||||||||||||||||
Commercial products revenue |
290 | 280 | 3.6 | 556 | 560 | (.7 | ) | |||||||||||||||||
Mortgage banking revenue |
142 | 346 | (59.0 | ) | 342 | 645 | (47.0 | ) | ||||||||||||||||
Investment products fees |
59 | 60 | (1.7 | ) | 121 | 115 | 5.2 | |||||||||||||||||
Securities gains (losses), net |
19 | 43 | (55.8 | ) | 37 | 68 | (45.6 | ) | ||||||||||||||||
Other |
142 | 200 | (29.0 | ) | 300 | 390 | (23.1 | ) | ||||||||||||||||
Total noninterest income |
$ | 2,548 | $ | 2,619 | (2.7 | )% | $ | 4,944 | $ | 5,000 | (1.1 | )% |
6 |
U.S. Bancorp |
Table 3 |
Noninterest Expense |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
||||||||||||||||||||||
Compensation |
$ | 1,872 | $ | 1,798 | 4.1 | % | $ | 3,725 | $ | 3,601 | 3.4 | % | ||||||||||||||||
Employee benefits |
374 | 337 | 11.0 | 770 | 721 | 6.8 | ||||||||||||||||||||||
Net occupancy and equipment |
265 | 258 | 2.7 | 534 | 521 | 2.5 | ||||||||||||||||||||||
Professional services |
111 | 108 | 2.8 | 225 | 206 | 9.2 | ||||||||||||||||||||||
Marketing and business development |
106 | 90 | 17.8 | 186 | 138 | 34.8 | ||||||||||||||||||||||
Technology and communications |
350 | 362 | (3.3 | ) | 699 | 721 | (3.1 | ) | ||||||||||||||||||||
Postage, printing and supplies |
69 | 65 | 6.2 | 141 | 134 | 5.2 | ||||||||||||||||||||||
Other intangibles |
40 | 40 | — | 87 | 78 | 11.5 | ||||||||||||||||||||||
Other |
340 | 329 | 3.3 | 662 | 646 | 2.5 | ||||||||||||||||||||||
Total before merger and integration charges |
3,527 | 3,387 | 4.1 | 7,029 | 6,766 | 3.9 | ||||||||||||||||||||||
Merger and integration charges |
197 | — | * | 197 | — | * | ||||||||||||||||||||||
Total noninterest expense |
$ | 3,724 | $ | 3,387 | 9.9 | % | $ | 7,226 | $ | 6,766 | 6.8 | % | ||||||||||||||||
Efficiency ratio (a) |
62.1 | % | 59.0 | % | 62.4 | % | 60.5 | % |
* |
Not meaningful |
a) |
See Non-GAAP Financial Measures beginning on page 31. |
U.S. Bancorp | 7 |
Table 4 |
Investment Securities |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
(Dollars in Millions) | Amortized Cost |
Fair Value | Weighted- Average Maturity in Years |
Weighted- Average Yield (d) |
Amortized Cost |
Fair Value | Weighted- Average Maturity in Years |
Weighted- Average Yield (d) |
||||||||||||||||||||||||
Held-to-maturity |
||||||||||||||||||||||||||||||||
U.S. Treasury and agencies |
$ | 1,343 | $ | 1,337 | 3.8 | 2.85 | % | $ | — | $ | — | — | — | % | ||||||||||||||||||
Mortgage-backed securities (a) |
60,160 | 54,320 | 10.0 | 1.92 | 41,858 | 41,812 | 7.4 | 1.45 | ||||||||||||||||||||||||
Total held-to-maturity |
$ | 61,503 | $ | 55,657 | 9.8 | 1.94 | % | $ | 41,858 | $ | 41,812 | 7.4 | 1.45 | % | ||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||
U.S. Treasury and agencies |
$ | 25,779 | $ | 23,767 | 6.9 | 1.95 | % | $ | 36,648 | $ | 36,609 | 6.7 | 1.54 | % | ||||||||||||||||||
Mortgage-backed securities (a) |
71,544 | 65,316 | 8.0 | 1.96 | 85,394 | 85,564 | 4.9 | 1.58 | ||||||||||||||||||||||||
Asset-backed securities (a) |
— | — | — | — | 62 | 66 | 5.2 | 1.53 | ||||||||||||||||||||||||
Obligations of state and political subdivisions (b) (c) |
10,925 | 9,716 | 13.0 | 3.64 | 10,130 | 10,717 | 6.6 | 3.67 | ||||||||||||||||||||||||
Other |
7 | 7 | 2.9 | 2.07 | 7 | 7 | 3.4 | 2.07 | ||||||||||||||||||||||||
Total available-for-sale |
$ | 108,255 | $ | 98,806 | 8.2 | 2.13 | % | $ | 132,241 | $ | 132,963 | 5.5 | 1.73 | % |
(a) |
Information related to asset and mortgage-backed securities included above is presented based upon weighted-average maturities that take into account anticipated future prepayments. |
(b) |
Information related to obligations of state and political subdivisions is presented based upon yield to first optional call date if the security is purchased at a premium, and yield to maturity if the security is purchased at par or a discount. |
(c) |
Maturity calculations for obligations of state and political subdivisions are based on the first optional call date for securities with a fair value above par and the contractual maturity date for securities with a fair value equal to or below par. |
(d) |
Yields on investment securities are computed based on amortized cost balances. Weighted-average yields for obligations of state and political subdivisions are presented on a fully-taxable equivalent basis based on a federal income tax rate of 21 percent. |
8 |
U.S. Bancorp |
U.S. Bancorp | 9 |
• | Macroeconomic environment and other qualitative considerations, such as regulatory and compliance changes, litigation developments, geopolitical events, and technology and cybersecurity; |
• | Credit measures, including adversely rated and nonperforming loans, leveraged transactions, credit concentrations and lending limits; |
• | Interest rate and market risk, including market value and net income simulation, and trading-related Value at Risk (“VaR”); |
• | Liquidity risk, including funding projections under various stressed scenarios; |
• | Operational and compliance risk, including losses stemming from events such as fraud, processing errors, control breaches, breaches in data security or adverse business decisions, as well as reporting on technology performance, and various legal and regulatory compliance measures; |
• | Capital ratios and projections, including regulatory measures and stressed scenarios; and |
• | Strategic and reputation risk considerations, impacts and responses. |
10 |
U.S. Bancorp |
U.S. Bancorp | 11 |
Residential Mortgages (Dollars in Millions) |
Interest Only |
Amortizing | Total | Percent of Total |
||||||||||||
Loan-to-Value |
||||||||||||||||
Less than or equal to 80% |
$ | 4,391 | $ | 68,699 | $ | 73,090 | 89.0 | % | ||||||||
Over 80% through 90% |
2 | 1,605 | 1,607 | 2.0 | ||||||||||||
Over 90% through 100% |
— | 113 | 113 | .2 | ||||||||||||
Over 100% |
— | 39 | 39 | — | ||||||||||||
No LTV available |
— | 17 | 17 | — | ||||||||||||
Loans purchased from GNMA mortgage pools (a) |
— | 7,248 | 7,248 | 8.8 | ||||||||||||
Total |
$ | 4,393 | $ | 77,721 | $ | 82,114 | 100.0 | % |
(a) |
Represents loans purchased and loans that could be purchased from Government National Mortgage Association (“GNMA”) mortgage pools under delinquent loan repurchase options whose payments are primarily insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs. |
Home Equity and Second Mortgages (Dollars in Millions) |
Lines | Loans | Total | Percent of Total |
||||||||||||
Loan-to-Value Loan-to-Value |
||||||||||||||||
Less than or equal to 80% |
$ | 9,557 | $ | 868 | $ | 10,425 | 95.0 | % | ||||||||
Over 80% through 90% |
203 | 214 | 417 | 3.8 | ||||||||||||
Over 90% through 100% |
22 | 17 | 39 | .4 | ||||||||||||
Over 100% |
33 | 3 | 36 | .3 | ||||||||||||
No LTV/CLTV available |
54 | 2 | 56 | .5 | ||||||||||||
Total |
$ | 9,869 | $ | 1,104 | $ | 10,973 | 100.0 | % |
Junior Liens Behind | ||||||||||||
(Dollars in Millions) | Company Owned or Serviced First Lien |
Third Party First Lien |
Total | |||||||||
Total |
$ | 2,755 | $ | 5,267 | $ | 8,022 | ||||||
Percent 30—89 days past due |
.25 | % | .24 | % | .24 | % | ||||||
Percent 90 days or more past due |
.03 | % | .03 | % | .03 | % | ||||||
Weighted-average CLTV |
56 | % | 54 | % | 55 | % | ||||||
Weighted-average credit score |
785 | 786 | 785 |
Percent of Total (a) |
||||
Credit score > 660 |
88 | % | ||
Credit score < 660 |
12 | |||
No credit score |
— |
(a) |
Credit score distribution excludes loans serviced by others. |
12 |
U.S. Bancorp |
Table 5 |
Delinquent Loan Ratios as a Percent of Ending Loan Balances |
90 days or more past due excluding |
June 30, 2022 |
December 31, 2021 |
||||||
Commercial |
||||||||
Commercial |
.08 | % | .05 | % | ||||
Lease financing |
— | — | ||||||
Total commercial |
.07 | .04 | ||||||
Commercial Real Estate |
||||||||
Commercial mortgages |
— | — | ||||||
Construction and development |
.04 | .10 | ||||||
Total commercial real estate |
.01 | .03 | ||||||
Residential Mortgages (a) |
.12 | .24 | ||||||
Credit Card |
.69 | .73 | ||||||
Other Retail |
||||||||
Retail leasing |
.03 | .04 | ||||||
Home equity and second mortgages |
.35 | .35 | ||||||
Other |
.05 | .06 | ||||||
Total other retail |
.10 | .11 | ||||||
Total loans |
.13 | % | .15 | % | ||||
90 days or more past due including |
June 30, 2022 |
December 31, 2021 |
||||||
Commercial |
.19 | % | .20 | % | ||||
Commercial real estate |
.53 | .76 | ||||||
Residential mortgages (a) |
.40 | .53 | ||||||
Credit card |
.69 | .73 | ||||||
Other retail |
.35 | .35 | ||||||
Total loans |
.35 | % | .42 | % |
(a) |
Delinquent loan ratios exclude $1.7 billion at June 30, 2022, and $1.5 billion at December 31, 2021, of loans purchased and loans that could be purchased from GNMA mortgage pools under delinquent loan repurchase options whose repayments are primarily insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs. Including these loans, the ratio of residential mortgages 90 days or more past due including all nonperforming loans was 2.42 percent at June 30, 2022, and 2.43 percent at December 31, 2021. |
Amount | As a Percent of Ending Loan Balances |
|||||||||||||||||||
(Dollars in Millions) | June 30, 2022 |
December 31, 2021 |
June 30, 2022 |
December 31, 2021 |
||||||||||||||||
Residential Mortgages (a) |
||||||||||||||||||||
30-89 days |
$ | 100 | $ | 124 | .12 | % | .15 | % | ||||||||||||
90 days or more |
102 | 181 | .12 | .24 | ||||||||||||||||
Nonperforming |
223 | 226 | .27 | .30 | ||||||||||||||||
Total |
$ | 425 | $ | 531 | .52 | % | .69 | % | ||||||||||||
Credit Card |
||||||||||||||||||||
30-89 days |
$ | 200 | $ | 193 | .84 | % | .86 | % | ||||||||||||
90 days or more |
164 | 165 | .69 | .73 | ||||||||||||||||
Nonperforming |
— | — | — | — | ||||||||||||||||
Total |
$ | 364 | $ | 358 | 1.54 | % | 1.59 | % | ||||||||||||
Other Retail |
||||||||||||||||||||
Retail Leasing |
||||||||||||||||||||
30-89 days |
$ | 25 | $ | 29 | .39 | % | .40 | % | ||||||||||||
90 days or more |
2 | 3 | .03 | .04 | ||||||||||||||||
Nonperforming |
9 | 10 | .14 | .14 | ||||||||||||||||
Total |
$ | 36 | $ | 42 | .55 | % | .58 | % | ||||||||||||
Home Equity and Second Mortgages |
||||||||||||||||||||
30-89 days |
$ | 35 | $ | 55 | .32 | % | .53 | % | ||||||||||||
90 days or more |
38 | 37 | .35 | .35 | ||||||||||||||||
Nonperforming |
118 | 116 | 1.08 | 1.11 | ||||||||||||||||
Total |
$ | 191 | $ | 208 | 1.74 | % | 1.99 | % | ||||||||||||
Other (b) |
||||||||||||||||||||
30-89 days |
$ | 176 | $ | 191 | .41 | % | .43 | % | ||||||||||||
90 days or more |
22 | 26 | .05 | .06 | ||||||||||||||||
Nonperforming |
21 | 24 | .05 | .05 | ||||||||||||||||
Total |
$ | 219 | $ | 241 | .51 | % | .54 | % |
(a) |
Excludes $642 million of loans 30-89 days past due and $1.7 billion of loans 90 days or more past due at June 30, 2022, purchased and loans that could be purchased from GNMA mortgage pools under delinquent loan repurchase options that continue to accrue interest, compared with $791 million and $1.5 billion at December 31, 2021, respectively. |
(b) |
Includes revolving credit, installment, automobile and student loans. |
U.S. Bancorp | 13 |
As a Percent of Performing TDRs | ||||||||||||||||||||
At June 30, 2022 (Dollars in Millions) |
Performing TDRs |
30-89 Days Past Due |
90 Days or More Past Due |
Nonperforming TDRs |
Total TDRs |
|||||||||||||||
Commercial |
$ | 141 | 4.7 | % | 2.4 | % | $ | 63 | (a) | $ | 204 | |||||||||
Commercial real estate |
110 | .7 | — | 117 | (b) | 227 | ||||||||||||||
Residential mortgages |
1,533 | 2.6 | 2.4 | 134 | 1,667 | (d) | ||||||||||||||
Credit card |
252 | 11.7 | 5.9 | — | 252 | |||||||||||||||
Other retail |
183 | 8.8 | 4.6 | 36 | (c) | 219 | (e) | |||||||||||||
TDRs, excluding loans purchased from GNMA mortgage pools |
2,219 | 4.2 | 2.9 | 350 | 2,569 | |||||||||||||||
Loans purchased from GNMA mortgage pools (g) |
965 | — | — | — | 965 | (f) | ||||||||||||||
Total |
$ | 3,184 | 2.9 | % | 2.0 | % | $ | 350 | $ | 3,534 |
(a) |
Primarily represents loans less than six months from the modification date that have not met the performance period required to return to accrual status (generally six months) and small business credit cards with a modified rate equal to 0 percent. |
(b) |
Primarily represents loans less than six months from the modification date that have not met the performance period required to return to accrual status (generally six months). |
(c) |
Primarily represents loans with a modified rate equal to 0 percent. |
(d) |
Includes $214 million of residential mortgage loans to borrowers that have had debt discharged through bankruptcy and $20 million in trial period arrangements or previously placed in trial period arrangements but not successfully completed. |
(e) |
Includes $60 million of other retail loans to borrowers that have had debt discharged through bankruptcy and $13 million in trial period arrangements or previously placed in trial period arrangements but not successfully completed. |
(f) |
Includes $159 million of Federal Housing Administration and United States Department of Veterans Affairs residential mortgage loans to borrowers that have had debt discharged through bankruptcy and $126 million in trial period arrangements or previously placed in trial period arrangements but not successfully completed. |
(g) |
Approximately 7.2 percent and 35.4 percent of the total TDR loans purchased from GNMA mortgage pools are 30-89 days past due and 90 days or more past due, respectively, but are not classified as delinquent as their repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs. |
14 |
U.S. Bancorp |
U.S. Bancorp | 15 |
Table 6 |
Nonperforming Assets (a) |
(Dollars in Millions) | June 30, 2022 |
December 31, 2021 |
||||||
Commercial |
||||||||
Commercial |
$116 | $139 | ||||||
Lease financing |
32 | 35 | ||||||
Total commercial |
148 | 174 | ||||||
Commercial Real Estate |
||||||||
Commercial mortgages |
147 | 213 | ||||||
Construction and development |
59 | 71 | ||||||
Total commercial real estate |
206 | 284 | ||||||
Residential Mortgages (b) |
223 | 226 | ||||||
Credit Card |
— | — | ||||||
Other Retail |
||||||||
Retail leasing |
9 | 10 | ||||||
Home equity and second mortgages |
118 | 116 | ||||||
Other |
21 | 24 | ||||||
Total other retail |
148 | 150 | ||||||
Total nonperforming loans (1) |
725 | 834 | ||||||
Other Real Estate (c) |
23 | 22 | ||||||
Other Assets |
22 | 22 | ||||||
Total nonperforming assets |
$770 | $878 | ||||||
Accruing loans 90 days or more past due (b) |
$423 | $472 | ||||||
Period-end loans (2) |
$332,369 | $312,028 | ||||||
Nonperforming loans to total loans (1)/(2) |
.22 | % | .27 | % | ||||
Nonperforming assets to total loans plus other real estate (c) |
.23 | % | .28 | % |
(Dollars in Millions) | Commercial and Commercial Real Estate |
Residential Mortgages, Credit Card and Other Retail |
Total | |||||||||
Balance December 31, 2021 |
$ | 461 | $ | 417 | $ | 878 | ||||||
Additions to nonperforming assets |
||||||||||||
New nonaccrual loans and foreclosed properties |
168 | 123 | 291 | |||||||||
Advances on loans |
5 | 1 | 6 | |||||||||
Total additions |
173 | 124 | 297 | |||||||||
Reductions in nonperforming assets |
||||||||||||
Paydowns, payoffs |
(173 | ) | (36 | ) | (209 | ) | ||||||
Net sales |
(6 | ) | (12 | ) | (18 | ) | ||||||
Return to performing status |
(47 | ) | (76 | ) | (123 | ) | ||||||
Charge-offs (d) |
(51 | ) | (4 | ) | (55 | ) | ||||||
Total reductions |
(277 | ) | (128 | ) | (405 | ) | ||||||
Net additions to (reductions in) nonperforming assets |
(104 | ) | (4 | ) | (108 | ) | ||||||
Balance June 30, 2022 |
$ | 357 | $ | 413 | $ | 770 |
(a) |
Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due. |
(b) |
Excludes $1.7 billion at June 30, 2022, and $1.5 billion at December 31, 2021, of loans purchased and loans that could be purchased from GNMA mortgage pools under delinquent loan repurchase options that are 90 days or more past due that continue to accrue interest, as their repayments are primarily insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs. |
(c) |
Foreclosed GNMA loans of $40 million at June 30, 2022, and $22 million at December 31, 2021, continue to accrue interest and are recorded as other assets and excluded from nonperforming assets because they are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs. |
(d) |
Charge-offs exclude actions for certain card products and loan sales that were not classified as nonperforming at the time the charge-off occurred. |
16 |
U.S. Bancorp |
Table 7 |
Net Charge-offs as a Percent of Average Loans Outstanding |
Three Months Ended June 30 | ||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||||||
Loan | Net | Loan | Net | |||||||||||||||||||||||||
(Dollars in Millions) |
Balance | Charge-offs |
Percent | Balance | Charge-offs |
Percent | ||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||
Commercial |
$ | 115,758 | $ | 28 | .10 | % | $ | 97,713 | $ | 26 | .11 | % | ||||||||||||||||
Lease financing |
4,899 | 2 | .16 | 5,261 | 1 | .08 | ||||||||||||||||||||||
Total commercial |
120,657 | 30 | .10 | 102,974 | 27 | .11 | ||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||||||
Commercial mortgages |
29,676 | (2 | ) | (.03 | ) | 27,721 | — | — | ||||||||||||||||||||
Construction |
9,841 | 8 | .33 | 10,843 | — | — | ||||||||||||||||||||||
Total commercial real estate |
39,517 | 6 | .06 | 38,564 | — | — | ||||||||||||||||||||||
Residential mortgages |
80,228 | (9 | ) | (.04 | ) | 73,351 | (10 | ) | (.05 | ) | ||||||||||||||||||
Credit card |
22,748 | 118 | 2.08 | 21,116 | 148 | 2.81 | ||||||||||||||||||||||
Other retail |
||||||||||||||||||||||||||||
Retail leasing |
6,708 | — | — | 7,873 | (1 | ) | (.05 | ) | ||||||||||||||||||||
Home equity and second mortgages |
10,726 | (3 | ) | (.11 | ) | 11,368 | (3 | ) | (.11 | ) | ||||||||||||||||||
Other |
43,603 | 19 | .17 | 39,038 | 19 | .20 | ||||||||||||||||||||||
Total other retail |
61,037 | 16 | .11 | 58,279 | 15 | .10 | ||||||||||||||||||||||
Total loans |
$ | 324,187 | $ | 161 | .20 | % | $ | 294,284 | $ | 180 | .25 | % |
Six Months Ended June 30 | ||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||||||
Loan | Net | Loan | Net | |||||||||||||||||||||||||
(Dollars in Millions) |
Balance | Charge-offs |
Percent | Balance | Charge-offs |
Percent | ||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||
Commercial |
$ | 111,810 | $ | 54 | .10 | % | $ | 97,237 | $ | 78 | .16 | % | ||||||||||||||||
Lease financing |
4,951 | 8 | .33 | 5,298 | 5 | .19 | ||||||||||||||||||||||
Total commercial |
116,761 | 62 | .11 | 102,535 | 83 | .16 | ||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||||||
Commercial mortgages |
29,253 | (2 | ) | (.01 | ) | 27,844 | (12 | ) | (.09 | ) | ||||||||||||||||||
Construction |
10,049 | 3 | .06 | 10,831 | 5 | .09 | ||||||||||||||||||||||
Total commercial real estate |
39,302 | 1 | .01 | 38,675 | (7 | ) | (.04 | ) | ||||||||||||||||||||
Residential mortgages |
78,847 | (15 | ) | (.04 | ) | 74,271 | (15 | ) | (.04 | ) | ||||||||||||||||||
Credit card |
22,297 | 230 | 2.08 | 21,130 | 292 | 2.79 | ||||||||||||||||||||||
Other retail |
||||||||||||||||||||||||||||
Retail leasing |
6,908 | 1 | .03 | 7,924 | — | — | ||||||||||||||||||||||
Home equity and second mortgages |
10,561 | (5 | ) | (.10 | ) | 11,713 | (5 | ) | (.09 | ) | ||||||||||||||||||
Other |
43,932 | 49 | .22 | 37,890 | 55 | .29 | ||||||||||||||||||||||
Total other retail |
61,401 | 45 | .15 | 57,527 | 50 | .18 | ||||||||||||||||||||||
Total loans |
$ | 318,608 | $ | 323 | .20 | % | $ | 294,138 | $ | 403 | .28 | % |
U.S. Bancorp | 17 |
18 |
U.S. Bancorp |
June 30, 2022 |
December 31, 2021 |
|||||||
United States unemployment rate for the three months ending (a) |
||||||||
June 30, 2022 |
3.6 | % | 3.6 | % | ||||
September 30, 2022 |
3.4 | 3.5 | ||||||
December 31, 2022 |
3.3 | 3.5 | ||||||
United States real gross domestic product for the three months ending (b) |
||||||||
June 30, 2022 |
2.5 | % | 4.4 | % | ||||
September 30, 2022 |
2.8 | 4.5 | ||||||
December 31, 2022 |
1.8 | 3.4 |
(a) |
Reflects quarterly average of forecasted reported United States unemployment rate. |
(b) |
Reflects year-over-year growth rates. |
U.S. Bancorp | 19 |
Table 8 |
Summary of Allowance for Credit Losses |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
Balance at beginning of period |
$ | 6,105 | $ | 6,960 | $ | 6,155 | $ | 8,010 | ||||||||||||
Charge-Offs |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Commercial |
48 | 54 | 95 | 134 | ||||||||||||||||
Lease financing |
5 | 4 | 13 | 10 | ||||||||||||||||
Total commercial |
53 | 58 | 108 | 144 | ||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Commercial mortgages |
1 | 3 | 1 | 8 | ||||||||||||||||
Construction and development |
8 | 1 | 9 | 6 | ||||||||||||||||
Total commercial real estate |
9 | 4 | 10 | 14 | ||||||||||||||||
Residential mortgages |
2 | 5 | 7 | 10 | ||||||||||||||||
Credit card |
162 | 192 | 320 | 382 | ||||||||||||||||
Other retail |
||||||||||||||||||||
Retail leasing |
4 | 4 | 9 | 15 | ||||||||||||||||
Home equity and second mortgages |
2 | 2 | 5 | 6 | ||||||||||||||||
Other |
44 | 49 | 97 | 117 | ||||||||||||||||
Total other retail |
50 | 55 | 111 | 138 | ||||||||||||||||
Total charge-offs |
276 | 314 | 556 | 688 | ||||||||||||||||
Recoveries |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Commercial |
20 | 28 | 41 | 56 | ||||||||||||||||
Lease financing |
3 | 3 | 5 | 5 | ||||||||||||||||
Total commercial |
23 | 31 | 46 | 61 | ||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Commercial mortgages |
3 | 3 | 3 | 20 | ||||||||||||||||
Construction and development |
— | 1 | 6 | 1 | ||||||||||||||||
Total commercial real estate |
3 | 4 | 9 | 21 | ||||||||||||||||
Residential mortgages |
11 | 15 | 22 | 25 | ||||||||||||||||
Credit card |
44 | 44 | 90 | 90 | ||||||||||||||||
Other retail |
||||||||||||||||||||
Retail leasing |
4 | 5 | 8 | 15 | ||||||||||||||||
Home equity and second mortgages |
5 | 5 | 10 | 11 | ||||||||||||||||
Other |
25 | 30 | 48 | 62 | ||||||||||||||||
Total other retail |
34 | 40 | 66 | 88 | ||||||||||||||||
Total recoveries |
115 | 134 | 233 | 285 | ||||||||||||||||
Net Charge-Offs |
||||||||||||||||||||
Commercial |
||||||||||||||||||||
Commercial |
28 | 26 | 54 | 78 | ||||||||||||||||
Lease financing |
2 | 1 | 8 | 5 | ||||||||||||||||
Total commercial |
30 | 27 | 62 | 83 | ||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Commercial mortgages |
(2 | ) | — | (2 | ) | (12 | ) | |||||||||||||
Construction and development |
8 | — | 3 | 5 | ||||||||||||||||
Total commercial real estate |
6 | — | 1 | (7 | ) | |||||||||||||||
Residential mortgages |
(9 | ) | (10 | ) | (15 | ) | (15 | ) | ||||||||||||
Credit card |
118 | 148 | 230 | 292 | ||||||||||||||||
Other retail |
||||||||||||||||||||
Retail leasing |
— | (1 | ) | 1 | — | |||||||||||||||
Home equity and second mortgages |
(3 | ) | (3 | ) | (5 | ) | (5 | ) | ||||||||||||
Other |
19 | 19 | 49 | 55 | ||||||||||||||||
Total other retail |
16 | 15 | 45 | 50 | ||||||||||||||||
Total net charge-offs |
161 | 180 | 323 | 403 | ||||||||||||||||
Provision for credit losses |
311 | (170 | ) | 423 | (997 | ) | ||||||||||||||
Balance at end of period |
$ | 6,255 | $ | 6,610 | $ | 6,255 | $ | 6,610 | ||||||||||||
Components |
||||||||||||||||||||
Allowance for loan losses |
$ | 5,832 | $ | 6,026 | ||||||||||||||||
Liability for unfunded credit commitments |
423 | 584 | ||||||||||||||||||
Total allowance for credit losses (1) |
$ | 6,255 | $ | 6,610 | ||||||||||||||||
Period-end loans (2) |
$ | 332,369 | $ | 296,912 | ||||||||||||||||
Nonperforming loans (3) |
725 | 1,018 | ||||||||||||||||||
Allowance for Credit Losses as a Percentage of |
||||||||||||||||||||
Period-end loans (1)/(2) |
1.88 | % | 2.23 | % | ||||||||||||||||
Nonperforming loans (1)/(3) |
863 | 649 | ||||||||||||||||||
Nonperforming and accruing loans 90 days or more past due |
545 | 474 | ||||||||||||||||||
Nonperforming assets |
812 | 624 | ||||||||||||||||||
Annualized net charge-offs |
969 | 916 |
20 |
U.S. Bancorp |
U.S. Bancorp | 21 |
Table 9 |
Sensitivity of Net Interest Income |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||
Down 50 bps Immediate |
Up 50 bps Immediate |
Down 200 bps Gradual |
Up 200 bps Gradual |
Down 50 bps Immediate |
Up 50 bps Immediate |
Down 200 bps Gradual |
Up 200 bps Gradual |
|||||||||||||||||||||||||||||
Net interest income |
(1.45 | )% | 1.17 | % | * | 1.54 | % | (3.77 | )% | 3.09 | % | * | 5.39 | % |
* |
Given the level of interest rates, downward rate scenario is not computed. |
• | To convert fixed-rate debt and available-for-sale |
• | To convert floating-rate loans and debt from floating-rate payments to fixed-rate payments; |
• | To mitigate changes in value of the Company’s unfunded mortgage loan commitments, funded MLHFS and MSRs; |
• | To mitigate remeasurement volatility of foreign currency denominated balances; and |
• | To mitigate the volatility of the Company’s net investment in foreign operations driven by fluctuations in foreign currency exchange rates. |
22 |
U.S. Bancorp |
U.S. Bancorp | 23 |
Six Months Ended June 30 (Dollars in Millions) |
2022 | 2021 | ||||||
Average |
$ | 1 | $ | 2 | ||||
High |
2 | 4 | ||||||
Low |
1 | 1 | ||||||
Period-end |
2 | 2 |
Six Months Ended June 30 (Dollars in Millions) |
2022 | 2021 | ||||||
Average |
$ | 5 | $ | 7 | ||||
High |
9 | 9 | ||||||
Low |
3 | 5 | ||||||
Period-end |
9 | 8 |
Six Months Ended June 30 (Dollars in Millions) |
2022 | 2021 | ||||||
Residential Mortgage Loans Held For Sale and Related Hedges |
||||||||
Average |
$ | 2 | $ | 10 | ||||
High |
5 | 19 | ||||||
Low |
1 | 5 | ||||||
Mortgage Servicing Rights and Related Hedges |
||||||||
Average |
$ | 7 | $ | 4 | ||||
High |
13 | 11 | ||||||
Low |
3 | 1 |
24 |
U.S. Bancorp |
U.S. Bancorp | 25 |
Table 10 |
Regulatory Capital Ratios |
(Dollars in Millions) | June 30, 2022 |
December 31, 2021 |
||||||||||
Basel III standardized approach: |
||||||||||||
Common equity tier 1 capital |
$ | 42,944 | $ | 41,701 | ||||||||
Tier 1 capital |
50,195 | 48,516 | ||||||||||
Total risk-based capital |
58,307 | 56,250 | ||||||||||
Risk-weighted assets |
441,804 | 418,571 | ||||||||||
Common equity tier 1 capital as a percent of risk-weighted assets |
9.7 | % | 10.0 | % | ||||||||
Tier 1 capital as a percent of risk-weighted assets |
11.4 | 11.6 | ||||||||||
Total risk-based capital as a percent of risk-weighted assets |
13.2 | 13.4 | ||||||||||
Tier 1 capital as a percent of adjusted quarterly average assets (leverage ratio) |
8.6 | 8.6 | ||||||||||
Tier 1 capital as a percent of total on- and off-balance sheet leverage exposure (total leverage exposure ratio) |
7.1 | 6.9 |
Period | Total Number of Shares Purchased |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Program |
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (In Millions) |
||||||||||||
April |
308,312 | (a) | $ | 53.07 | 8,312 | $ | 1,390 | |||||||||
May |
392 | 44.52 | 392 | 1,390 | ||||||||||||
June |
994 | 48.05 | 994 | 1,390 | ||||||||||||
Total |
309,698 | (a) | $ | 53.05 | 9,698 | $ | 1,390 |
(a) |
Includes 300,000 shares of common stock purchased, at an average price per share of $53.11, in open-market transactions by U.S. Bank National Association, the Company’s banking subsidiary, in its capacity as trustee of the U.S. Bank 401(k) Savings Plan, which is the Company’s employee retirement savings plan. |
26 |
U.S. Bancorp |
U.S. Bancorp | 27 |
Table 11 |
Line of Business Financial Performance |
Corporate and Commercial Banking |
Consumer and Business Banking |
Wealth Management and Investment Services |
||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30 (Dollars in Millions) |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
|||||||||||||||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 784 | $ | 726 | 8.0 | % | $ | 1,617 | $ | 1,534 | 5.4 | % | $ | 352 | $ | 246 | 43.1 | % | ||||||||||||||||||||||||||||||
Noninterest income |
272 | 265 | 2.6 | 395 | 634 | (37.7 | ) | 652 | 549 | 18.8 | ||||||||||||||||||||||||||||||||||||||
Total net revenue |
1,056 | 991 | 6.6 | 2,012 | 2,168 | (7.2 | ) | 1,004 | 795 | 26.3 | ||||||||||||||||||||||||||||||||||||||
Noninterest expense |
453 | 433 | 4.6 | 1,419 | 1,375 | 3.2 | 581 | 521 | 11.5 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
603 | 558 | 8.1 | 593 | 793 | (25.2 | ) | 423 | 274 | 54.4 | ||||||||||||||||||||||||||||||||||||||
Provision for credit losses |
100 | — | * | (75 | ) | (68 | ) | (10.3 | ) | (4 | ) | (4 | ) | — | ||||||||||||||||||||||||||||||||||
Income (loss) before income taxes |
503 | 558 | (9.9 | ) | 668 | 861 | (22.4 | ) | 427 | 278 | 53.6 | |||||||||||||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
126 | 140 | (10.0 | ) | 167 | 215 | (22.3 | ) | 107 | 70 | 52.9 | |||||||||||||||||||||||||||||||||||||
Net income (loss) |
377 | 418 | (9.8 | ) | 501 | 646 | (22.4 | ) | 320 | 208 | 53.8 | |||||||||||||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 377 | $ | 418 | (9.8 | ) | $ | 501 | $ | 646 | (22.4 | ) | $ | 320 | $ | 208 | 53.8 | |||||||||||||||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 123,210 | $ | 102,275 | 20.5 | $ | 141,135 | $ | 140,826 | .2 | $ | 22,320 | $ | 17,442 | 28.0 | |||||||||||||||||||||||||||||||||
Goodwill |
1,912 | 1,647 | 16.1 | 3,244 | 3,476 | (6.7 | ) | 1,718 | 1,618 | 6.2 | ||||||||||||||||||||||||||||||||||||||
Other intangible assets |
4 | 5 | (20.0 | ) | 3,634 | 2,828 | 28.5 | 300 | 84 | * | ||||||||||||||||||||||||||||||||||||||
Assets |
137,773 | 114,186 | 20.7 | 156,132 | 161,695 | (3.4 | ) | 25,786 | 20,470 | 26.0 | ||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits |
58,266 | 60,696 | (4.0 | ) | 31,642 | 33,702 | (6.1 | ) | 25,019 | 23,288 | 7.4 | |||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
93,678 | 70,019 | 33.8 | 168,486 | 158,164 | 6.5 | 71,759 | 73,347 | (2.2 | ) | ||||||||||||||||||||||||||||||||||||||
Total deposits |
151,944 | 130,715 | 16.2 | 200,128 | 191,866 | 4.3 | 96,778 | 96,635 | .1 | |||||||||||||||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
13,989 | 13,816 | 1.3 | 12,366 | 12,337 | .2 | 3,618 | 3,089 | 17.1 |
Payment Services |
Treasury and Corporate Support |
Consolidated Company |
||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30 (Dollars in Millions) |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
|||||||||||||||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 619 | $ | 595 | 4.0 | % | $ | 92 | $ | 63 | 46.0 | % | $ | 3,464 | $ | 3,164 | 9.5 | % | ||||||||||||||||||||||||||||||
Noninterest income |
994 | 913 | 8.9 | 235 | 258 | (8.9 | ) | 2,548 | 2,619 | (2.7 | ) | |||||||||||||||||||||||||||||||||||||
Total net revenue |
1,613 | 1,508 | 7.0 | 327 | 321 | 1.9 | 6,012 | 5,783 | 4.0 | |||||||||||||||||||||||||||||||||||||||
Noninterest expense |
871 | 829 | 5.1 | 400 | 229 | 74.7 | 3,724 | 3,387 | 9.9 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
742 | 679 | 9.3 | (73 | ) | 92 | * | 2,288 | 2,396 | (4.5 | ) | |||||||||||||||||||||||||||||||||||||
Provision for credit losses |
221 | 91 | * | 69 | (189 | ) | * | 311 | (170 | ) | * | |||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes |
521 | 588 | (11.4 | ) | (142 | ) | 281 | * | 1,977 | 2,566 | (23.0 | ) | ||||||||||||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
130 | 147 | (11.6 | ) | (87 | ) | 6 | * | 443 | 578 | (23.4 | ) | ||||||||||||||||||||||||||||||||||||
Net income (loss) |
391 | 441 | (11.3 | ) | (55 | ) | 275 | * | 1,534 | 1,988 | (22.8 | ) | ||||||||||||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | — | (3 | ) | (6 | ) | 50.0 | (3 | ) | (6 | ) | 50.0 | |||||||||||||||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 391 | $ | 441 | (11.3 | ) | $ | (58 | ) | $ | 269 | * | $ | 1,531 | $ | 1,982 | (22.8 | ) | ||||||||||||||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 33,854 | $ | 30,030 | 12.7 | $ | 3,668 | $ | 3,711 | (1.2 | ) | $ | 324,187 | $ | 294,284 | 10.2 | ||||||||||||||||||||||||||||||||
Goodwill |
3,318 | 3,176 | 4.5 | — | — | — | 10,192 | 9,917 | 2.8 | |||||||||||||||||||||||||||||||||||||||
Other intangible assets |
438 | 518 | (15.4 | ) | — | — | — | 4,376 | 3,435 | 27.4 | ||||||||||||||||||||||||||||||||||||||
Assets |
41,054 | 35,618 | 15.3 | 219,166 | 219,396 | (.1 | ) | 579,911 | 551,365 | 5.2 | ||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits |
3,396 | 5,030 | (32.5 | ) | 2,504 | 2,581 | (3.0 | ) | 120,827 | 125,297 | (3.6 | ) | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
167 | 141 | 18.4 | 1,599 | 2,242 | (28.7 | ) | 335,689 | 303,913 | 10.5 | ||||||||||||||||||||||||||||||||||||||
Total deposits |
3,563 | 5,171 | (31.1 | ) | 4,103 | 4,823 | (14.9 | ) | 456,516 | 429,210 | 6.4 | |||||||||||||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
8,115 | 7,413 | 9.5 | 11,078 | 16,307 | (32.1 | ) | 49,166 | 52,962 | (7.2 | ) |
* |
Not meaningful |
28 |
U.S. Bancorp |
Corporate and Commercial Banking |
Consumer and Business Banking |
Wealth Management and Investment Services |
||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30 (Dollars in Millions) |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
|||||||||||||||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 1,523 | $ | 1,448 | 5.2 | % | $ | 3,129 | $ | 3,035 | 3.1 | % | $ | 627 | $ | 514 | 22.0 | % | ||||||||||||||||||||||||||||||
Noninterest income |
517 | 533 | (3.0 | ) | 856 | 1,203 | (28.8 | ) | 1,248 | 1,080 | 15.6 | |||||||||||||||||||||||||||||||||||||
Total net revenue |
2,040 | 1,981 | 3.0 | 3,985 | 4,238 | (6.0 | ) | 1,875 | 1,594 | 17.6 | ||||||||||||||||||||||||||||||||||||||
Noninterest expense |
878 | 853 | 2.9 | 2,839 | 2,731 | 4.0 | 1,174 | 1,020 | 15.1 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
1,162 | 1,128 | 3.0 | 1,146 | 1,507 | (24.0 | ) | 701 | 574 | 22.1 | ||||||||||||||||||||||||||||||||||||||
Provision for credit losses |
104 | (46 | ) | * | (28 | ) | (108 | ) | 74.1 | 4 | 1 | * | ||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes |
1,058 | 1,174 | (9.9 | ) | 1,174 | 1,615 | (27.3 | ) | 697 | 573 | 21.6 | |||||||||||||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
265 | 294 | (9.9 | ) | 294 | 404 | (27.2 | ) | 175 | 144 | 21.5 | |||||||||||||||||||||||||||||||||||||
Net income (loss) |
793 | 880 | (9.9 | ) | 880 | 1,211 | (27.3 | ) | 522 | 429 | 21.7 | |||||||||||||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 793 | $ | 880 | (9.9 | ) | $ | 880 | $ | 1,211 | (27.3 | ) | $ | 522 | $ | 429 | 21.7 | |||||||||||||||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 119,557 | $ | 102,201 | 17.0 | $ | 140,984 | $ | 141,170 | (.1 | ) | $ | 21,521 | $ | 17,147 | 25.5 | ||||||||||||||||||||||||||||||||
Goodwill |
1,912 | 1,647 | 16.1 | 3,252 | 3,476 | (6.4 | ) | 1,739 | 1,618 | 7.5 | ||||||||||||||||||||||||||||||||||||||
Other intangible assets |
4 | 5 | (20.0 | ) | 3,406 | 2,661 | 28.0 | 283 | 63 | * | ||||||||||||||||||||||||||||||||||||||
Assets |
132,856 | 114,229 | 16.3 | 156,770 | 162,803 | (3.7 | ) | 25,124 | 20,297 | 23.8 | ||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits |
60,298 | 58,524 | 3.0 | 31,807 | 33,244 | (4.3 | ) | 26,204 | 22,339 | 17.3 | ||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
90,336 | 70,943 | 27.3 | 167,279 | 154,450 | 8.3 | 71,024 | 78,489 | (9.5 | ) | ||||||||||||||||||||||||||||||||||||||
Total deposits |
150,634 | 129,467 | 16.3 | 199,086 | 187,694 | 6.1 | 97,228 | 100,828 | (3.6 | ) | ||||||||||||||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
13,859 | 14,092 | (1.7 | ) | 12,311 | 12,407 | (.8 | ) | 3,607 | 3,062 | 17.8 |
Payment Services |
Treasury and Corporate Support |
Consolidated Company |
||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30 (Dollars in Millions) |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
2022 | 2021 | Percent Change |
|||||||||||||||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 1,241 | $ | 1,224 | 1.4 | % | $ | 144 | $ | 32 | * | % | $ | 6,664 | $ | 6,253 | 6.6 | % | ||||||||||||||||||||||||||||||
Noninterest income |
1,852 | 1,698 | 9.1 | 471 | 486 | (3.1 | ) | 4,944 | 5,000 | (1.1 | ) | |||||||||||||||||||||||||||||||||||||
Total net revenue |
3,093 | 2,922 | 5.9 | 615 | 518 | 18.7 | 11,608 | 11,253 | 3.2 | |||||||||||||||||||||||||||||||||||||||
Noninterest expense |
1,726 | 1,627 | 6.1 | 609 | 535 | 13.8 | 7,226 | 6,766 | 6.8 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
1,367 | 1,295 | 5.6 | 6 | (17 | ) | * | 4,382 | 4,487 | (2.3 | ) | |||||||||||||||||||||||||||||||||||||
Provision for credit losses |
351 | 50 | * | (8 | ) | (894 | ) | 99.1 | 423 | (997 | ) | * | ||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes |
1,016 | 1,245 | (18.4 | ) | 14 | 877 | (98.4 | ) | 3,959 | 5,484 | (27.8 | ) | ||||||||||||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
254 | 311 | (18.3 | ) | (121 | ) | 58 | * | 867 | 1,211 | (28.4 | ) | ||||||||||||||||||||||||||||||||||||
Net income (loss) |
762 | 934 | (18.4 | ) | 135 | 819 | (83.5 | ) | 3,092 | 4,273 | (27.6 | ) | ||||||||||||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | — | (4 | ) | (11 | ) | 63.6 | (4 | ) | (11 | ) | 63.6 | |||||||||||||||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 762 | $ | 934 | (18.4 | ) | $ | 131 | $ | 808 | (83.8 | ) | $ | 3,088 | $ | 4,262 | (27.5 | ) | ||||||||||||||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 32,802 | $ | 29,831 | 10.0 | $ | 3,744 | $ | 3,789 | (1.2 | ) | $ | 318,608 | $ | 294,138 | 8.3 | ||||||||||||||||||||||||||||||||
Goodwill |
3,322 | 3,175 | 4.6 | — | — | — | 10,225 | 9,916 | 3.1 | |||||||||||||||||||||||||||||||||||||||
Other intangible assets |
450 | 530 | (15.1 | ) | — | — | — | 4,143 | 3,259 | 27.1 | ||||||||||||||||||||||||||||||||||||||
Assets |
39,803 | 35,356 | 12.6 | 224,110 | 217,372 | 3.1 | 578,663 | 550,057 | 5.2 | |||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits |
3,534 | 5,146 | (31.3 | ) | 2,532 | 2,591 | (2.3 | ) | 124,375 | 121,844 | 2.1 | |||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
164 | 137 | 19.7 | 2,174 | 1,932 | 12.5 | 330,977 | 305,951 | 8.2 | |||||||||||||||||||||||||||||||||||||||
Total deposits |
3,698 | 5,283 | (30.0 | ) | 4,706 | 4,523 | 4.0 | 455,352 | 427,795 | 6.4 | ||||||||||||||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
8,067 | 7,535 | 7.1 | 13,460 | 15,750 | (14.5 | ) | 51,304 | 52,846 | (2.9 | ) |
* |
Not meaningful |
U.S. Bancorp | 29 |
30 |
U.S. Bancorp |
• | Tangible common equity to tangible assets, |
• | Tangible common equity to risk-weighted assets, and |
• | Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the CECL methodology. |
U.S. Bancorp | 31 |
(Dollars in Millions) | June 30, 2022 |
December 31, 2021 |
||||||
Total equity |
$ | 49,069 | $ | 55,387 | ||||
Preferred stock |
(6,808 | ) | (6,371 | ) | ||||
Noncontrolling interests |
(464 | ) | (469 | ) | ||||
Goodwill (net of deferred tax liability) (1) |
(9,204 | ) | (9,323 | ) | ||||
Intangible assets, other than mortgage servicing rights |
(780 | ) | (785 | ) | ||||
Tangible common equity (a) |
31,813 | 38,439 | ||||||
Common equity tier 1 capital, determined in accordance with transitional regulatory capital requirements related to the CECL methodology implementation |
42,944 | 41,701 | ||||||
Adjustments (2) |
(1,300 | ) | (1,733 | ) | ||||
Common equity tier 1 capital, reflecting the full implementation of the CECL methodology (b) |
41,644 | 39,968 | ||||||
Total assets |
591,381 | 573,284 | ||||||
Goodwill (net of deferred tax liability) (1) |
(9,204 | ) | (9,323 | ) | ||||
Intangible assets, other than mortgage servicing rights |
(780 | ) | (785 | ) | ||||
Tangible assets (c) |
581,397 | 563,176 | ||||||
Risk-weighted assets, determined in accordance with prescribed regulatory capital requirements effective for the Company (d) |
441,804 | 418,571 | ||||||
Adjustments (3) |
(317 | ) | (357 | ) | ||||
Risk-weighted assets, reflecting the full implementation of the CECL methodology (e) |
441,487 | 418,214 | ||||||
Ratios |
||||||||
Tangible common equity to tangible assets (a)/(c) |
5.5 | % | 6.8 | % | ||||
Tangible common equity to risk-weighted assets (a)/(d) |
7.2 | 9.2 | ||||||
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the CECL methodology (b)/(e) |
9.4 | 9.6 |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||
Net interest income |
$ | 3,435 | $ | 3,137 | $ | 6,608 | $ | 6,200 | ||||||||||||
Taxable-equivalent adjustment (4) |
29 | 27 | 56 | 53 | ||||||||||||||||
Net interest income, on a taxable-equivalent basis |
3,464 | 3,164 | 6,664 | 6,253 | ||||||||||||||||
Net interest income, on a taxable-equivalent basis (as calculated above) |
3,464 | 3,164 | 6,664 | 6,253 | ||||||||||||||||
Noninterest income |
2,548 | 2,619 | 4,944 | 5,000 | ||||||||||||||||
Less: Securities gains (losses), net |
19 | 43 | 37 | 68 | ||||||||||||||||
Total net revenue, excluding net securities gains (losses) (f) |
5,993 | 5,740 | 11,571 | 11,185 | ||||||||||||||||
Noninterest expense (g) |
3,724 | 3,387 | 7,226 | 6,766 | ||||||||||||||||
Efficiency ratio (g)/(f) |
62.1 | % | 59.0 | % | 62.4 | % | 60.5 | % |
(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 CECL 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 CECL 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. |
32 |
U.S. Bancorp |
U.S. Bancorp | 33 |
(Dollars in Millions) | June 30, 2022 |
December 31, 2021 |
||||||
(Unaudited) | ||||||||
Assets |
||||||||
Cash and due from banks |
$ | 39,124 | $ | 28,905 | ||||
Investment securities |
||||||||
Held-to-maturity (fair value $55,657 and $41,812, respectively) |
61,503 | 41,858 | ||||||
Available-for-sale ($ |
98,806 | 132,963 | ||||||
Loans held for sale (including $2,773 and $6,623 of mortgage loans carried at fair value, respectively) |
3,943 | 7,775 | ||||||
Loans |
||||||||
Commercial |
125,983 | 112,023 | ||||||
Commercial real estate |
39,753 | 39,053 | ||||||
Residential mortgages |
82,114 | 76,493 | ||||||
Credit card |
23,697 | 22,500 | ||||||
Other retail |
60,822 | 61,959 | ||||||
Total loans |
332,369 | 312,028 | ||||||
Less allowance for loan losses |
(5,832 | ) | (5,724 | ) | ||||
Net loans |
326,537 | 306,304 | ||||||
Premises and equipment |
3,177 | 3,305 | ||||||
Goodwill |
10,157 | 10,262 | ||||||
Other intangible assets |
4,487 | 3,738 | ||||||
Other assets (including $1,258 |
43,647 | 38,174 | ||||||
Total assets |
$ | 591,381 | $ | 573,284 | ||||
Liabilities and Shareholders’ Equity |
||||||||
Deposits |
||||||||
Noninterest-bearing |
$ | 129,130 | $ | 134,901 | ||||
Interest-bearing |
337,972 | 321,182 | ||||||
Total deposits |
467,102 | 456,083 | ||||||
Short-term borrowings |
24,963 | 11,796 | ||||||
Long-term debt |
29,408 | 32,125 | ||||||
Other liabilities |
20,839 | 17,893 | ||||||
Total liabilities |
542,312 | 517,897 | ||||||
Shareholders’ equity |
||||||||
Preferred stock |
6,808 | 6,371 | ||||||
Common stock, par value $0.01 a share—authorized: 4,000,000,000 shares; issued: 6/30/22 and 12/31/21—2,125,725,742 shares |
21 | 21 | ||||||
Capital surplus |
8,555 | 8,539 | ||||||
Retained earnings |
70,772 | 69,201 | ||||||
Less cost of common stock in treasury: 6/30/22—639,959,317 shares; 12/31/21—642,223,571 shares |
(27,190 | ) | (27,271 | ) | ||||
Accumulated other comprehensive income (loss) |
(10,361 | ) | (1,943 | ) | ||||
Total U.S. Bancorp shareholders’ equity |
48,605 | 54,918 | ||||||
Noncontrolling interests |
464 | 469 | ||||||
Total equity |
49,069 | 55,387 | ||||||
Total liabilities and equity |
$ | 591,381 | $ | 573,284 |
(a) |
Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral. |
3 4 |
U.S. Bancorp |
(Dollars and Shares in Millions, Except Per Share Data) (Unaudited) |
Three Months Ended June 30 |
Six Months Ended June 30 |
||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||
Interest Income |
||||||||||||||||||||
Loans |
$ | 2,869 | $ | 2,677 | $ | 5,468 | $ | 5,401 | ||||||||||||
Loans held for sale |
54 | 55 | 114 | 122 | ||||||||||||||||
Investment securities |
806 | 618 | 1,523 | 1,135 | ||||||||||||||||
Other interest income |
96 | 32 | 138 | 65 | ||||||||||||||||
Total interest income |
3,825 | 3,382 | 7,243 | 6,723 | ||||||||||||||||
Interest Expense |
||||||||||||||||||||
Deposits |
177 | 82 | 257 | 167 | ||||||||||||||||
Short-term borrowings |
57 | 18 | 78 | 34 | ||||||||||||||||
Long-term debt |
156 | 145 | 300 | 322 | ||||||||||||||||
Total interest expense |
390 | 245 | 635 | 523 | ||||||||||||||||
Net interest income |
3,435 | 3,137 | 6,608 | 6,200 | ||||||||||||||||
Provision for credit losses |
311 | (170 | ) | 423 | (997 | ) | ||||||||||||||
Net interest income after provision for credit losses |
3,124 | 3,307 | 6,185 | 7,197 | ||||||||||||||||
Noninterest Income |
||||||||||||||||||||
Credit and debit card revenue |
399 | 396 | 737 | 732 | ||||||||||||||||
Corporate payment products revenue |
172 | 138 | 330 | 264 | ||||||||||||||||
Merchant processing services |
425 | 374 | 788 | 692 | ||||||||||||||||
Trust and investment management fees |
566 | 446 | 1,066 | 890 | ||||||||||||||||
Deposit service charges |
165 | 176 | 342 | 337 | ||||||||||||||||
Treasury management fees |
169 | 160 | 325 | 307 | ||||||||||||||||
Commercial products revenue |
290 | 280 | 556 | 560 | ||||||||||||||||
Mortgage banking revenue |
142 | 346 | 342 | 645 | ||||||||||||||||
Investment products fees |
59 | 60 | 121 | 115 | ||||||||||||||||
Securities gains (losses), net |
19 | 43 | 37 | 68 | ||||||||||||||||
Other |
142 | 200 | 300 | 390 | ||||||||||||||||
Total noninterest income |
2,548 | 2,619 | 4,944 | 5,000 | ||||||||||||||||
Noninterest Expense |
||||||||||||||||||||
Compensation |
1,872 | 1,798 | 3,725 | 3,601 | ||||||||||||||||
Employee benefits |
374 | 337 | 770 | 721 | ||||||||||||||||
Net occupancy and equipment |
265 | 258 | 534 | 521 | ||||||||||||||||
Professional services |
111 | 108 | 225 | 206 | ||||||||||||||||
Marketing and business development |
106 | 90 | 186 | 138 | ||||||||||||||||
Technology and communications |
350 | 362 | 699 | 721 | ||||||||||||||||
Postage, printing and supplies |
69 | 65 | 141 | 134 | ||||||||||||||||
Other intangibles |
40 | 40 | 87 | 78 | ||||||||||||||||
Merger and integration charges |
197 | — | 197 | — | ||||||||||||||||
Other |
340 | 329 | 662 | 646 | ||||||||||||||||
Total noninterest expense |
3,724 | 3,387 | 7,226 | 6,766 | ||||||||||||||||
Income before income taxes |
1,948 | 2,539 | 3,903 | 5,431 | ||||||||||||||||
Applicable income taxes |
414 | 551 | 811 | 1,158 | ||||||||||||||||
Net income |
1,534 | 1,988 | 3,092 | 4,273 | ||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
(3 | ) | (6 | ) | (4 | ) | (11 | ) | ||||||||||||
Net income attributable to U.S. Bancorp |
$ | 1,531 | $ | 1,982 | $ | 3,088 | $ | 4,262 | ||||||||||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 1,464 | $ | 1,914 | $ | 2,930 | $ | 4,089 | ||||||||||||
Earnings per common share |
$ | .99 | $ | 1.29 | $ | 1.97 | $ | 2.73 | ||||||||||||
Diluted earnings per common share |
$ | .99 | $ | 1.28 | $ | 1.97 | $ | 2.73 | ||||||||||||
Average common shares outstanding |
1,486 | 1,489 | 1,485 | 1,495 | ||||||||||||||||
Average diluted common shares outstanding |
1,487 | 1,490 | 1,486 | 1,497 |
U.S. Bancorp | 3 5 |
(Dollars in Millions) (Unaudited) |
Three Months Ended June 30 |
Six Months Ended June 30 |
||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||
Net income |
$ | 1,534 | $ | 1,988 | $ | 3,092 | $ | 4,273 | ||||||||||||
Other Comprehensive Income (Loss) |
||||||||||||||||||||
Changes in unrealized gains (losses) on investment securities available-for-sale |
(4,761 | ) | 1,195 | (11,515 | ) | (2,183 | ) | |||||||||||||
Changes in unrealized gains (losses) on derivative hedges |
98 | 14 | 98 | 113 | ||||||||||||||||
Foreign currency translation |
(3 | ) | (1 | ) | (3 | ) | 24 | |||||||||||||
Reclassification to earnings of realized (gains) losses |
84 | (11 | ) | 151 | 7 | |||||||||||||||
Income taxes related to other comprehensive income (loss) |
1,159 | (304 | ) | 2,851 | 515 | |||||||||||||||
Total other comprehensive income (loss) |
(3,423 | ) | 893 | (8,418 | ) | (1,524 | ) | |||||||||||||
Comprehensive income (loss) |
(1,889 | ) | 2,881 | (5,326 | ) | 2,749 | ||||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests |
(3 | ) | (6 | ) | (4 | ) | (11 | ) | ||||||||||||
Comprehensive income (loss) attributable to U.S. Bancorp |
$ | (1,892 | ) | $ | 2,875 | $ | (5,330 | ) | $ | 2,738 |
3 6 |
U.S. Bancorp |
U.S. Bancorp Shareholders | ||||||||||||||||||||||||||||||||||||||||
(Dollars and Share s in Millions, Except PerShare Data) (Unaudited) |
Common Shares Outstanding |
Preferred Stock |
Common Stock |
Capital Surplus |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
Total U.S. Bancorp Shareholders’ Equity |
Noncontrolling Interests |
Total Equity |
||||||||||||||||||||||||||||||
Balance March 31, 2021 |
1,497 | $ | 5,968 | $ | 21 | $ | 8,487 | $ | 65,740 | $ | (26,443 | ) | $ | (2,095 | ) | $ | 51,678 | $ | 630 | $ | 52,308 | |||||||||||||||||||
Net income (loss) |
1,982 | 1,982 | 6 | 1,988 | ||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
893 | 893 | 893 | |||||||||||||||||||||||||||||||||||||
Preferred stock dividends (a) |
(58 | ) | (58 | ) | (58 | ) | ||||||||||||||||||||||||||||||||||
Common stock dividends ($.42 per share) |
(625 | ) | (625 | ) | (625 | ) | ||||||||||||||||||||||||||||||||||
Issuance of common and treasury stock |
1 | (7 | ) | 25 | 18 | 18 | ||||||||||||||||||||||||||||||||||
Purchase of treasury stock |
(15 | ) | (887 | ) | (887 | ) | (887 | ) | ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
— | (6 | ) | (6 | ) | |||||||||||||||||||||||||||||||||||
Net other changes in noncontrolling interests |
— | 5 | 5 | |||||||||||||||||||||||||||||||||||||
Stock option and restricted stock grants |
38 | 38 | 38 | |||||||||||||||||||||||||||||||||||||
Balance June 30, 2021 |
1,483 | $ | 5,968 | $ | 21 | $ | 8,518 | $ | 67,039 | $ | (27,305 | ) | $ | (1,202 | ) | $ | 53,039 | $ | 635 | $ | 53,674 | |||||||||||||||||||
Balance March 31, 2022 |
1,486 | $ | 6,808 | $ | 21 | $ | 8,515 | $ | 69,987 | $ | (27,193 | ) | $ | (6,938 | ) | $ | 51,200 | $ | 468 | $ | 51,668 | |||||||||||||||||||
Net income (loss) |
1,531 | 1,531 | 3 | 1,534 | ||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
(3,423 | ) | (3,423 | ) | (3,423 | ) | ||||||||||||||||||||||||||||||||||
Preferred stock dividends (b) |
(59 | ) | (59 | ) | (59 | ) | ||||||||||||||||||||||||||||||||||
Common stock dividends ($.46 per share) |
(687 | ) | (687 | ) | (687 | ) | ||||||||||||||||||||||||||||||||||
Issuance of common and treasury stock |
(3 | ) | 4 | 1 | 1 | |||||||||||||||||||||||||||||||||||
Purchase of treasury stock |
(1 | ) | (1 | ) | (1 | ) | ||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
— | (2 | ) | (2 | ) | |||||||||||||||||||||||||||||||||||
Net other changes in noncontrolling interests |
— | (5 | ) | (5 | ) | |||||||||||||||||||||||||||||||||||
Stock option and restricted stock grants |
43 | 43 | 43 | |||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 |
1,486 | $ | 6,808 | $ | 21 | $ | 8,555 | $ | 70,772 | $ | (27,190 | ) | $ | (10,361 | ) | $ | 48,605 | $ | 464 | $ | 49,069 | |||||||||||||||||||
Balance December 31, 2020 |
1,507 | $ | 5,983 | $ | 21 | $ | 8,511 | $ | 64,188 | $ | (25,930 | ) | $ | 322 | $ | 53,095 | $ | 630 | $ | 53,725 | ||||||||||||||||||||
Net income (loss) |
4,262 | 4,262 | 11 | 4,273 | ||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
(1,524 | ) | (1,524 | ) | (1,524 | ) | ||||||||||||||||||||||||||||||||||
Preferred stock dividends (c) |
(148 | ) | (148 | ) | (148 | ) | ||||||||||||||||||||||||||||||||||
Common stock dividends ($.84 per share) |
(1,258 | ) | (1,258 | ) | (1,258 | ) | ||||||||||||||||||||||||||||||||||
Issuance of preferred stock |
730 | 730 | 730 | |||||||||||||||||||||||||||||||||||||
Redemption of preferred stock |
(745 | ) | (5 | ) | (750 | ) | (750 | ) | ||||||||||||||||||||||||||||||||
Issuance of common and treasury stock |
4 | (126 | ) | 162 | 36 | 36 | ||||||||||||||||||||||||||||||||||
Purchase of treasury stock |
(28 | ) | (1,537 | ) | (1,537 | ) | (1,537 | ) | ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
— | (11 | ) | (11 | ) | |||||||||||||||||||||||||||||||||||
Net other changes in noncontrolling interests |
— | 5 | 5 | |||||||||||||||||||||||||||||||||||||
Stock option and restricted stock grants |
133 | 133 | 133 | |||||||||||||||||||||||||||||||||||||
Balance June 30, 2021 |
1,483 | $ | 5,968 | $ | 21 | $ | 8,518 | $ | 67,039 | $ | (27,305 | ) | $ | (1,202 | ) | $ | 53,039 | $ | 635 | $ | 53,674 | |||||||||||||||||||
Balance December 31, 2021 |
1,484 | $ | 6,371 | $ | 21 | $ | 8,539 | $ | 69,201 | $ | (27,271 | ) | $ | (1,943 | ) | $ | 54,918 | $ | 469 | $ | 55,387 | |||||||||||||||||||
Net income (loss) |
3,088 | 3,088 | 4 | 3,092 | ||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
(8,418 | ) | (8,418 | ) | (8,418 | ) | ||||||||||||||||||||||||||||||||||
Preferred stock dividends (d) |
(143 | ) | (143 | ) | (143 | ) | ||||||||||||||||||||||||||||||||||
Common stock dividends ($.92 per share) |
(1,374 | ) | (1,374 | ) | (1,374 | ) | ||||||||||||||||||||||||||||||||||
Issuance of preferred stock |
437 | 437 | 437 | |||||||||||||||||||||||||||||||||||||
Issuance of common and treasury stock |
3 | (119 | ) | 136 | 17 | 17 | ||||||||||||||||||||||||||||||||||
Purchase of treasury stock |
(1 | ) | (55 | ) | (55 | ) | (55 | ) | ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
— | (4 | ) | (4 | ) | |||||||||||||||||||||||||||||||||||
Net other changes in noncontrolling interests |
— | (5 | ) | (5 | ) | |||||||||||||||||||||||||||||||||||
Stock option and restricted stock grants |
135 | 135 | 135 | |||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 |
1,486 | $ | 6,808 | $ | 21 | $ | 8,555 | $ | 70,772 | $ | (27,190 | ) | $ | (10,361 | ) | $ | 48,605 | $ | 464 | $ | 49,069 |
(a) |
Reflects dividends declared per share on the Company’s Series A, Series B, Series F, Series K, Series L and Series M Non-Cumulative Perpetual Preferred Stock of $884.722, $221.181, $406.25, $343.75, $234.375 and $250.00 respectively. |
(b) |
Reflects dividends declared per share on the Company’s Series A, Series B, Series K, Series L, Series M, Series N and Series O Non-Cumulative Perpetual Preferred Stock of $884.722, $221.181, $343.75, $234.375, $250.00, $231.25 and $281.25 respectively. |
(c) |
Reflects dividends declared per share on the Company’s Series A, Series B, Series F, Series I, Series J, Series K, Series L and Series M Non-Cumulative Perpetual Preferred Stock of $1,759.722, $439.931, $812.50, $232.953, $662.50, $687.50, $468.75 and $452.778 respectively. |
(d) |
Reflects dividends declared per share on the Company’s Series A, Series B, Series J, Series K, Series L, Series M, Series N and Series O Non-Cumulative Perpetual Preferred Stock of $1,759.722, $439.931, $662.50, $687.50, $468.75, $500.00, $462.50 and $487.50 respectively. |
U.S. Bancorp | 3 7 |
(Dollars in Millions) (Unaudited) |
Six Months Ended June 30 |
|||||||
2022 | 2021 | |||||||
Operating Activities |
||||||||
Net income attributable to U.S. Bancorp |
$ | 3,088 | $ | 4,262 | ||||
Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
Provision for credit losses |
423 | (997 | ) | |||||
Depreciation and amortization of premises and equipment |
170 | 168 | ||||||
Amortization of intangibles |
87 | 78 | ||||||
(Gain) loss on sale of loans held for sale |
192 | (584 | ) | |||||
(Gain) loss on sale of securities and other assets |
(67 | ) | (192 | ) | ||||
Loans originated for sale, net of repayments |
(17,325 | ) | (37,211 | ) | ||||
Proceeds from sales of loans held for sale |
20,564 | 39,789 | ||||||
Other, net |
3,594 | 1,207 | ||||||
Net cash provided by operating activities |
10,726 | 6,520 | ||||||
Investing Activities |
||||||||
Proceeds from sales of available-for-sale investment securities |
14,797 | 5,567 | ||||||
Proceeds from maturities of held-to-maturity investment securities |
2,407 | — | ||||||
Proceeds from maturities of available-for-sale investment securities |
9,665 | 23,685 | ||||||
Purchases of held-to-maturity investment securities |
(6,288 | ) | — | |||||
Purchases of available-for-sale investment securities |
(18,240 | ) | (54,911 | ) | ||||
Net (increase) decrease in loans outstanding |
(20,072 | ) | 727 | |||||
Proceeds from sales of loans |
1,671 | 2,386 | ||||||
Purchases of loans |
(1,698 | ) | (2,574 | ) | ||||
Net (increase) decrease in securities purchased under agreements to resell |
(154 | ) | 131 | |||||
Other, net |
(1,604 | ) | (367 | ) | ||||
Net cash used in investing activities |
(19,516 | ) | (25,356 | ) | ||||
Financing Activities |
||||||||
Net increase in deposits |
11,019 | 7,412 | ||||||
Net increase in short-term borrowings |
13,167 | 1,647 | ||||||
Proceeds from issuance of long-term debt |
2,206 | 1,152 | ||||||
Principal payments or redemption of long-term debt |
(5,154 | ) | (5,928 | ) | ||||
Proceeds from issuance of preferred stock |
437 | 730 | ||||||
Proceeds from issuance of common stock |
16 | 36 | ||||||
Repurchase of preferred stock |
(1,100 | ) | (1,250 | ) | ||||
Repurchase of common stock |
(55 | ) | (1,537 | ) | ||||
Cash dividends paid on preferred stock |
(154 | ) | (165 | ) | ||||
Cash dividends paid on common stock |
(1,373 | ) | (1,268 | ) | ||||
Net cash provided by financing activities |
19,009 | 829 | ||||||
Change in cash and due from banks |
10,219 | (18,007 | ) | |||||
Cash and due from banks at beginning of period |
28,905 | 62,580 | ||||||
Cash and due from banks at end of period |
$ | 39,124 | $ | 44,573 |
38 |
U.S. Bancorp |
Note 1 |
Basis of Presentation |
Note 2 |
Accounting Changes |
U.S. Bancorp | 39 |
Note 3 |
Business Combinations |
Note 4 |
Investment Securities |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
(Dollars in Millions) | Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Fair Value |
Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Fair Value |
||||||||||||||||||||||||
Held-to-maturity |
||||||||||||||||||||||||||||||||
U.S. Treasury and agencies |
$ | 1,343 | $ | – | $ | (6 | ) | $ | 1,337 | $ | – | $ | – | $ | – | $ | – | |||||||||||||||
Residential agency mortgage-backed securities |
60,160 | 2 | (5,842 | ) | 54,320 | 41,858 | 2 | (48 | ) | 41,812 | ||||||||||||||||||||||
Total held-to-maturity |
$ | 61,503 | $ | 2 | $ | (5,848 | ) | $ | 55,657 | $ | 41,858 | $ | 2 | $ | (48 | ) | $ | 41,812 | ||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||
U.S. Treasury and agencies |
$ | 25,779 | $ | – | $ | (2,012 | ) | $ | 23,767 | $ | 36,648 | $ | 205 | $ | (244 | ) | $ | 36,609 | ||||||||||||||
Mortgage-backed securities |
||||||||||||||||||||||||||||||||
Residential agency |
62,788 | 23 | (5,059 | ) | 57,752 | 76,761 | 665 | (347 | ) | 77,079 | ||||||||||||||||||||||
Commercial agency |
8,756 | – | (1,192 | ) | 7,564 | 8,633 | 53 | (201 | ) | 8,485 | ||||||||||||||||||||||
Asset-backed securities |
– | – | – | – | 62 | 4 | – | 66 | ||||||||||||||||||||||||
Obligations of state and political subdivisions |
10,925 | 11 | (1,220 | ) | 9,716 | 10,130 | 607 | (20 | ) | 10,717 | ||||||||||||||||||||||
Other |
7 | – | – | 7 | 7 | – | – | 7 | ||||||||||||||||||||||||
Total available-for-sale |
$ | 108,255 | $ | 34 | $ | (9,483 | ) | $ | 98,806 | $ | 132,241 | $ | 1,534 | $ | (812 | ) | $ | 132,963 |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Taxable |
$ | 732 | $ | 554 | $ | 1,378 | $ | 1,009 | ||||||||
Non-taxable |
74 | 64 | 145 | 126 | ||||||||||||
Total interest income from investment securities |
$ | 806 | $ | 618 | $ | 1,523 | $ | 1,135 |
4 0 |
U.S. Bancorp |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Realized gains |
$ | 144 | $ | 43 | $ | 386 | $ | 68 | ||||||||
Realized losses |
(125 | ) | – | (349 | ) | – | ||||||||||
Net realized gains |
$ | 19 | $ | 43 | $ | 37 | $ | 68 | ||||||||
Income tax on net realized gains |
$ | 5 | $ | 11 | $ | 9 | $ | 17 |
Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
(Dollars in Millions) | Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
||||||||||||||||||
U.S. Treasury and agencies |
$ | 19,590 | $ | (1,581 | ) | $ | 3,511 | $ | (431 | ) | $ | 23,101 | $ | (2,012 | ) | |||||||||
Residential agency mortgage-backed securities |
50,819 | (4,281 | ) | 5,360 | (778 | ) | 56,179 | (5,059 | ) | |||||||||||||||
Commercial agency mortgage-backed securities |
4,852 | (657 | ) | 2,711 | (535 | ) | 7,563 | (1,192 | ) | |||||||||||||||
Obligations of state and political subdivisions |
8,430 | (1,057 | ) | 396 | (163 | ) | 8,826 | (1,220 | ) | |||||||||||||||
Other |
6 | – | – | – | 6 | – | ||||||||||||||||||
Total investment securities |
$ | 83,697 | $ | (7,576 | ) | $ | 11,978 | $ | (1,907 | ) | $ | 95,675 | $ | (9,483 | ) |
U.S. Bancorp | 4 1 |
(Dollars in Millions) | Amortized Cost |
Fair Value |
Weighted- Average Maturity in Years |
Weighted- Average Yield (e) |
||||||||||||
Held-to-maturity |
||||||||||||||||
U.S. Treasury and Agencies |
||||||||||||||||
Maturing in one year or less |
$ | – | $ | – | – | – | % | |||||||||
Maturing after one year through five years |
1,343 | 1,337 | 3.8 | 2.85 | ||||||||||||
Maturing after five years through ten years |
– | – | – | – | ||||||||||||
Maturing after ten years |
– | – | – | – | ||||||||||||
Total |
$ | 1,343 | $ | 1,337 | 3.8 | 2.85 | % | |||||||||
Mortgage-Backed Securities (a) |
||||||||||||||||
Maturing in one year or less |
$ | – | $ | – | – | – | % | |||||||||
Maturing after one year through five years |
– | – | – | – | ||||||||||||
Maturing after five years through ten years |
23,977 | 22,825 | 9.1 | 2.22 | ||||||||||||
Maturing after ten years |
36,183 | 31,495 | 10.6 | 1.72 | ||||||||||||
Total |
$ | 60,160 | $ | 54,320 | 10.0 | 1.92 | % | |||||||||
Total held-to-maturity (d) |
$ | 61,503 | $ | 55,657 | 9.8 | 1.94 | % | |||||||||
Available-for-sale |
||||||||||||||||
U.S. Treasury and Agencies |
||||||||||||||||
Maturing in one year or less |
$ | 1,826 | $ | 1,824 | .3 | 1.96 | % | |||||||||
Maturing after one year through five years |
3,525 | 3,296 | 4.4 | 1.50 | ||||||||||||
Maturing after five years through ten years |
17,771 | 16,479 | 7.4 | 2.04 | ||||||||||||
Maturing after ten years |
2,657 | 2,168 | 11.8 | 1.99 | ||||||||||||
Total |
$ | 25,779 | $ | 23,767 | 6.9 | 1.95 | % | |||||||||
Mortgage-Backed Securities (a) |
||||||||||||||||
Maturing in one year or less |
$ | 44 | $ | 44 | .7 | 2.67 | % | |||||||||
Maturing after one year through five years |
12,785 | 12,381 | 3.2 | 2.03 | ||||||||||||
Maturing after five years through ten years |
33,303 | 30,454 | 7.9 | 1.81 | ||||||||||||
Maturing after ten years |
25,412 | 22,437 | 10.6 | 2.11 | ||||||||||||
Total |
$ | 71,544 | $ | 65,316 | 8.0 | 1.96 | % | |||||||||
Obligations of State and Political Subdivisions (b) (c) |
||||||||||||||||
Maturing in one year or less |
$ | 182 | $ | 182 | .3 | 4.63 | % | |||||||||
Maturing after one year through five years |
1,974 | 1,955 | 4.0 | 4.43 | ||||||||||||
Maturing after five years through ten years |
1,480 | 1,401 | 7.2 | 3.82 | ||||||||||||
Maturing after ten years |
7,289 | 6,178 | 16.9 | 3.36 | ||||||||||||
Total |
$ | 10,925 | $ | 9,716 | 13.0 | 3.64 | % | |||||||||
Other |
||||||||||||||||
Maturing in one year or less |
$ | – | $ | – | – | – | % | |||||||||
Maturing after one year through five years |
7 | 7 | 2.9 | 2.07 | ||||||||||||
Maturing after five years through ten years |
– | – | – | – | ||||||||||||
Maturing after ten years |
– | – | – | – | ||||||||||||
Total |
$ | 7 | $ | 7 | 2.9 | 2.07 | % | |||||||||
Total available-for-sale (d) |
$ | 108,255 | $ | 98,806 | 8.2 | 2.13 | % |
(a) |
Information related to asset and mortgage-backed securities included above is presented based upon weighted-average maturities that take into account anticipated future prepayments. |
(b) |
Information related to obligations of state and political subdivisions is presented based upon yield to first optional call date if the security is purchased at a premium, and yield to maturity if the security is purchased at par or a discount. |
(c) |
Maturity calculations for obligations of state and political subdivisions are based on the first optional call date for securities with a fair value above par and the contractual maturity date for securities with a fair value equal to or below par. |
(d) |
The weighted-average maturity of total held-to-maturity investment securities was 7.4 years at December 31, 2021, with a corresponding weighted-average yield of 1.45 percent. The weighted-average maturity of total available-for-sale investment securities was 5.5 years at December 31, 2021, with a corresponding weighted-average yield of 1.73 percent. |
(e) |
Weighted-average yields for obligations of state and political subdivisions are presented on a fully-taxable equivalent basis based on a federal income tax rate of 21 percent. Yields on investment securities are computed based on amortized cost balances, excluding any premiums or discounts recorded related to the transfer of investment securities at fair value from available-for-sale to held-to-maturity. |
4 2 |
U.S. Bancorp |
Note 5 |
Loans and Allowance for Credit Losses |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||
(Dollars in Millions) | Amount | Percent of Total |
Amount | Percent of Total |
||||||||||||||||
Commercial |
||||||||||||||||||||
Commercial |
$ | 121,130 | 36.4 | % | $ | 106,912 | 34.3 | % | ||||||||||||
Lease financing |
4,853 | 1.5 | 5,111 | 1.6 | ||||||||||||||||
Total commercial |
125,983 | 37.9 | 112,023 | 35.9 | ||||||||||||||||
Commercial Real Estate |
||||||||||||||||||||
Commercial mortgages |
29,864 | 9.0 | 28,757 | 9.2 | ||||||||||||||||
Construction and development |
9,889 | 3.0 | 10,296 | 3.3 | ||||||||||||||||
Total commercial real estate |
39,753 | 12.0 | 39,053 | 12.5 | ||||||||||||||||
Residential Mortgages |
||||||||||||||||||||
Residential mortgages |
73,522 | 22.1 | 67,546 | 21.6 | ||||||||||||||||
Home equity loans, first liens |
8,592 | 2.6 | 8,947 | 2.9 | ||||||||||||||||
Total residential mortgages |
82,114 | 24.7 | 76,493 | 24.5 | ||||||||||||||||
Credit Card |
23,697 | 7.1 | 22,500 | 7.2 | ||||||||||||||||
Other Retail |
||||||||||||||||||||
Retail leasing |
6,490 | 2.0 | 7,256 | 2.3 | ||||||||||||||||
Home equity and second mortgages |
10,973 | 3.3 | 10,446 | 3.4 | ||||||||||||||||
Revolving credit |
2,764 | .8 | 2,750 | .9 | ||||||||||||||||
Installment |
16,656 | 5.0 | 16,514 | 5.3 | ||||||||||||||||
Automobile |
23,830 | 7.2 | 24,866 | 8.0 | ||||||||||||||||
Student |
109 | – | 127 | – | ||||||||||||||||
Total other retail |
60,822 | 18.3 | 61,959 | 19.9 | ||||||||||||||||
Total loans |
$ | 332,369 | 100.0 | % | $ | 312,028 | 100.0 | % |
U.S. Bancorp | 4 3 |
44 |
U.S. Bancorp |
Three Months Ended June 30 (Dollars in Millions) |
Commercial |
Commercial Real Estate |
Residential Mortgages |
Credit Card |
Other Retail |
Total Loans |
||||||||||||||||||
2022 |
||||||||||||||||||||||||
Balance at beginning of period |
$1,836 | $1,074 | $600 | $1,639 | $ 956 | $6,105 | ||||||||||||||||||
Add |
||||||||||||||||||||||||
Provision for credit losses |
90 | (95 | ) | 49 | 225 | 42 | 311 | |||||||||||||||||
Deduct |
||||||||||||||||||||||||
Loans charged-off |
53 | 9 | 2 | 162 | 50 | 276 | ||||||||||||||||||
Less recoveries of loans charged-off |
(23 | ) | (3 | ) | (11 | ) | (44 | ) | (34 | ) | (115 | ) | ||||||||||||
Net loan charge-offs (recoveries) |
30 | 6 | (9 | ) | 118 | 16 | 161 | |||||||||||||||||
Balance at end of period |
$1,896 | $ |
$658 | $1,746 | $ |
$6,255 | ||||||||||||||||||
2021 |
|
|
| |||||||||||||||||||||
Balance at beginning of period |
$1,932 | $1,532 | $539 | $1,952 | $1,005 | $6,960 | ||||||||||||||||||
Add |
||||||||||||||||||||||||
Provision for credit losses |
(67 | ) | (123 | ) | (71 | ) | 87 | 4 | (170 | ) | ||||||||||||||
Deduct |
||||||||||||||||||||||||
Loans charged-off |
58 | 4 | 5 | 192 | 55 | 314 | ||||||||||||||||||
Less recoveries of loans charged-off |
(31 | ) | (4 | ) | (15 | ) | (44 | ) | (40 | ) | (134 | ) | ||||||||||||
Net loan charge-offs (recoveries) |
27 | – | (10 | ) | 148 | 15 | 180 | |||||||||||||||||
Balance at end of period |
$1,838 | $1,409 | $478 | $1,891 | $ 994 | $6,610 |
Six Months Ended June 30 (Dollars in Millions) |
Commercial |
Commercial Real Estate |
Residential Mortgages |
Credit Card |
Other Retail |
Total Loans |
||||||||||||||||||
2022 |
||||||||||||||||||||||||
Balance at beginning of period |
$1,849 | $1,123 | $565 | $1,673 | $ 945 | $6,155 | ||||||||||||||||||
Add |
||||||||||||||||||||||||
Provision for credit losses |
109 | (149 | ) | 78 | 303 | 82 | 423 | |||||||||||||||||
Deduct |
||||||||||||||||||||||||
Loans charged-off |
108 | 10 | 7 | 320 | 111 | 556 | ||||||||||||||||||
Less recoveries of loans charged-off |
(46 | ) | (9 | ) | (22 | ) | (90 | ) | (66 | ) | (233 | ) | ||||||||||||
Net loan charge-offs (recoveries) |
62 | 1 | (15 | ) | 230 | 45 | 323 | |||||||||||||||||
Balance at end of period |
$1,896 | $ |
$658 | $1,746 | $ |
$6,255 | ||||||||||||||||||
2021 |
|
|
| |||||||||||||||||||||
Balance at beginning of period |
$2,423 | $1,544 | $573 | $2,355 | $1,115 | $8,010 | ||||||||||||||||||
Add |
||||||||||||||||||||||||
Provision for credit losses |
(502 | ) | (142 | ) | (110 | ) | (172 | ) | (71 | ) | (997 | ) | ||||||||||||
Deduct |
||||||||||||||||||||||||
Loans charged-off |
144 | 14 | 10 | 382 | 138 | 688 | ||||||||||||||||||
Less recoveries of loans charged-off |
(61 | ) | (21 | ) | (25 | ) | (90 | ) | (88 | ) | (285 | ) | ||||||||||||
Net loan charge-offs (recoveries) |
83 | (7 | ) | (15 | ) | 292 | 50 | 403 | ||||||||||||||||
Balance at end of period |
$1,838 | $1,409 | $478 | $1,891 | $ 994 | $6,610 |
U.S. Bancorp | 4 5 |
Accruing |
||||||||||||||||||||
(Dollars in Millions) |
Current |
30-89 Days Past Due |
90 Days or More Past Due |
Nonperforming (b) |
Total |
|||||||||||||||
June 30, 2022 |
||||||||||||||||||||
Commercial |
$ | 125,490 | $ 254 | $ 91 | $148 | $125,983 | ||||||||||||||
Commercial real estate |
39,519 | 24 | 4 | 206 | 39,753 | |||||||||||||||
Residential mortgages (a) |
81,689 | 100 | 102 | 223 | 82,114 | |||||||||||||||
Credit card |
23,333 | 200 | 164 | – | 23,697 | |||||||||||||||
Other retail |
60,376 | 236 | 62 | 148 | 60,822 | |||||||||||||||
Total loans |
$ | 330,407 | $ |
$423 | $725 | $332,369 | ||||||||||||||
December 31, 2021 |
||||||||||||||||||||
Commercial |
$ | 111,270 | $ 530 | $49 | $174 | $112,023 | ||||||||||||||
Commercial real estate |
38,678 | 80 | 11 | 284 | 39,053 | |||||||||||||||
Residential mortgages (a) |
75,962 | 124 | 181 | 226 | 76,493 | |||||||||||||||
Credit card |
22,142 | 193 | 165 | – | 22,500 | |||||||||||||||
Other retail |
61,468 | 275 | 66 | 150 | 61,959 | |||||||||||||||
Total loans |
$ | 309,520 | $1,202 | $472 | $834 | $312,028 |
(a) |
At June 30, 2022, $ 642 million of loans 30–89 days past due and $1.7 billion of loans 90 days or more past due purchased and loans that could be purchased from Government National Mortgage Association (“GNMA”) mortgage pools under delinquent loan repurchase options whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs, were classified as current, compared with $791 million and $1.5 billion at December 31, 2021, respectively. |
(b) |
Substantially all nonperforming loans at June 30, 2022 and December 31, 2021, had an associated allowance for credit losses. The Company recognized interest income on nonperforming loans of $ 5 4 million for the three months ended June 30, 2022 and 2021, respectively, and $8 7 million for the six months ended June 30, 2022 and 2021, respectively. |
4 6 |
U.S. Bancorp |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
Criticized | Criticized | |||||||||||||||||||||||||||||||||||||||||||
(Dollars in Millions) | Pass | Special Mention |
Classified (a) | Total Criticized |
Total | Pass | Special Mention |
Classified (a) | Total Criticized |
Total | ||||||||||||||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||||||||||||||||||
Originated in 2022 |
$ 32,672 | $ 52 | $ 142 | $ 194 | $ 32,866 | $ – | $ – | $ – | $ – | $ – | ||||||||||||||||||||||||||||||||||
Originated in 2021 |
40,532 | 298 | 110 | 408 | 40,940 | 51,155 | 387 | 287 | 674 | 51,829 | ||||||||||||||||||||||||||||||||||
Originated in 2020 |
9,809 | 11 | 292 | 303 | 10,112 | 14,091 | 304 | 133 | 437 | 14,528 | ||||||||||||||||||||||||||||||||||
Originated in 2019 |
6,624 | 6 | 61 | 67 | 6,691 | 10,159 | 151 | 54 | 205 | 10,364 | ||||||||||||||||||||||||||||||||||
Originated in 2018 |
3,313 | 3 | 20 | 23 | 3,336 | 5,122 | 3 | 36 | 39 | 5,161 | ||||||||||||||||||||||||||||||||||
Originated prior to 2018 |
3,902 | 18 | 38 | 56 | 3,958 | 4,923 | 30 | 81 | 111 | 5,034 | ||||||||||||||||||||||||||||||||||
Revolving (b) |
27,628 | 277 | 175 | 452 | 28,080 | 24,722 | 268 | 117 | 385 | 25,107 | ||||||||||||||||||||||||||||||||||
Total commercial |
124,480 | 665 | 838 | 1,503 | 125,983 | 110,172 | 1,143 | 708 | 1,851 | 112,023 | ||||||||||||||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||||||||||||||||||||||
Originated in 2022 |
6,689 | 148 | 449 | 597 | 7,286 | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
Originated in 2021 |
11,992 | 63 | 452 | 515 | 12,507 | 13,364 | 6 | 990 | 996 | 14,360 | ||||||||||||||||||||||||||||||||||
Originated in 2020 |
6,570 | 16 | 181 | 197 | 6,767 | 7,459 | 198 | 263 | 461 | 7,920 | ||||||||||||||||||||||||||||||||||
Originated in 2019 |
5,009 | 140 | 340 | 480 | 5,489 | 6,368 | 251 | 610 | 861 | 7,229 | ||||||||||||||||||||||||||||||||||
Originated in 2018 |
2,348 | 29 | 211 | 240 | 2,588 | 2,996 | 29 | 229 | 258 | 3,254 | ||||||||||||||||||||||||||||||||||
Originated prior to 2018 |
3,438 | 19 | 143 | 162 | 3,600 | 4,473 | 55 | 224 | 279 | 4,752 | ||||||||||||||||||||||||||||||||||
Revolving |
1,511 | – | 5 | 5 | 1,516 | 1,494 | 1 | 43 | 44 | 1,538 | ||||||||||||||||||||||||||||||||||
Total commercial real estate |
37,557 | 415 | 1,781 | 2,196 | 39,753 | 36,154 | 540 | 2,359 | 2,899 | 39,053 | ||||||||||||||||||||||||||||||||||
Residential mortgages (c) |
||||||||||||||||||||||||||||||||||||||||||||
Originated in 2022 |
12,396 | – | – | – | 12,396 | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
Originated in 2021 |
29,446 | – | 3 | 3 | 29,449 | 29,882 | – | 3 | 3 | 29,885 | ||||||||||||||||||||||||||||||||||
Originated in 2020 |
14,384 | – | 10 | 10 | 14,394 | 15,948 | 1 | 8 | 9 | 15,957 | ||||||||||||||||||||||||||||||||||
Originated in 2019 |
5,834 | – | 24 | 24 | 5,858 | 6,938 | – | 36 | 36 | 6,974 | ||||||||||||||||||||||||||||||||||
Originated in 2018 |
2,383 | – | 18 | 18 | 2,401 | 2,889 | – | 30 | 30 | 2,919 | ||||||||||||||||||||||||||||||||||
Originated prior to 2018 |
17,328 | – | 288 | 288 | 17,616 | 20,415 | – | 342 | 342 | 20,757 | ||||||||||||||||||||||||||||||||||
Revolving |
– | – | – | – | – | 1 | – | – | – | 1 | ||||||||||||||||||||||||||||||||||
Total residential mortgages |
81,771 | – | 343 | 343 | 82,114 | 76,073 | 1 | 419 | 420 | 76,493 | ||||||||||||||||||||||||||||||||||
Credit card (d) |
23,532 | – | 165 | 165 | 23,697 | 22,335 | – | 165 | 165 | 22,500 | ||||||||||||||||||||||||||||||||||
Other retail |
||||||||||||||||||||||||||||||||||||||||||||
Originated in 2022 |
7,650 | – | 1 | 1 | 7,651 | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
Originated in 2021 |
18,825 | – | 8 | 8 | 18,833 | 22,455 | – | 6 | 6 | 22,461 | ||||||||||||||||||||||||||||||||||
Originated in 2020 |
9,981 | – | 10 | 10 | 9,991 | 12,071 | – | 9 | 9 | 12,080 | ||||||||||||||||||||||||||||||||||
Originated in 2019 |
5,476 | – | 13 | 13 | 5,489 | 7,223 | – | 17 | 17 | 7,240 | ||||||||||||||||||||||||||||||||||
Originated in 2018 |
2,204 | – | 10 | 10 | 2,214 | 3,285 | – | 14 | 14 | 3,299 | ||||||||||||||||||||||||||||||||||
Originated prior to 2018 |
2,626 | – | 18 | 18 | 2,644 | 3,699 | – | 24 | 24 | 3,723 | ||||||||||||||||||||||||||||||||||
Revolving |
13,381 | – | 113 | 113 | 13,494 | 12,532 | – | 112 | 112 | 12,644 | ||||||||||||||||||||||||||||||||||
Revolving converted to term |
464 | – | 42 | 42 | 506 | 472 | – | 40 | 40 | 512 | ||||||||||||||||||||||||||||||||||
Total other retail |
60,607 | – | 215 | 215 | 60,822 | 61,737 | – | 222 | 222 | 61,959 | ||||||||||||||||||||||||||||||||||
Total loans |
$327,947 | $1,080 | $3,342 | $4,422 | $332,369 | $306,471 | $1,684 | $3,873 | $5,557 | $312,028 | ||||||||||||||||||||||||||||||||||
Total outstanding commitments |
$702,561 | $2,021 | $4,851 | $6,872 | $709,433 | $662,363 | $3,372 | $5,684 | $9,056 | $671,419 |
Note: |
Year of origination is based on the origination date of a loan, or for existing loans the date when the maturity date, pricing or commitment amount is amended. |
(a) |
Classified rating on consumer loans primarily based on delinquency status. |
(b) |
Includes an immaterial amount of revolving converted to term loans. |
(c) |
At June 30, 2022, $1.7 billion of GNMA loans 90 days or more past due and $965 million of restructured GNMA loans whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs were classified with a pass rating, compared with $1.5 billion and $1.1 billion at December 31, 2021, respectively. |
(d) |
Predominately all credit card loans are considered revolving loans. Includes an immaterial amount of revolving converted to term loans. |
U.S. Bancorp | 4 7 |
2022 | 2021 | |||||||||||||||||||||||||||
(Dollars in Millions) | Number of Loans |
Pre-Modification Outstanding Loan Balance |
Post-Modification Outstanding Loan Balance |
Number of Loans |
Pre-Modification Outstanding Loan Balance |
Post-Modification Outstanding Loan Balance |
||||||||||||||||||||||
Three Months Ended June 30 |
||||||||||||||||||||||||||||
Commercial |
506 | $ 50 | $ 41 | 526 | $ 12 | $ 13 | ||||||||||||||||||||||
Commercial real estate |
28 | 11 | 9 | 30 | 38 | 41 | ||||||||||||||||||||||
Residential mortgages |
366 | 106 | 106 | 360 | 141 | 140 | ||||||||||||||||||||||
Credit card |
8,696 | 48 | 49 | 5,050 | 31 | 31 | ||||||||||||||||||||||
Other retail |
756 | 24 | 20 | 468 | 18 | 17 | ||||||||||||||||||||||
Total loans, excluding loans purchased from GNMA mortgage pools |
10,352 | 239 | 225 | 6,434 | 240 | 242 | ||||||||||||||||||||||
Loans purchased from GNMA mortgage pools |
353 | 47 | 50 | 478 | 67 | 69 | ||||||||||||||||||||||
Total loans |
10,705 | $ 286 | $275 | 6,912 | $ 307 | $ 311 | ||||||||||||||||||||||
Six Months Ended June 30 |
||||||||||||||||||||||||||||
Commercial |
1,015 | $ 88 | $ 73 | 1,230 | $ 87 | $ 73 | ||||||||||||||||||||||
Commercial real estate |
37 | 22 | 19 | 86 | 124 | 112 | ||||||||||||||||||||||
Residential mortgages |
1,206 | 334 | 332 | 696 | 245 | 244 | ||||||||||||||||||||||
Credit card |
18,035 | 98 | 99 | 10,836 | 64 | 65 | ||||||||||||||||||||||
Other retail |
1,484 | 61 | 57 | 1,793 | 55 | 49 | ||||||||||||||||||||||
Total loans, excluding loans purchased from GNMA mortgage pools |
21,777 | 603 | 580 | 14,641 | 575 | 543 | ||||||||||||||||||||||
Loans purchased from GNMA mortgage pools |
743 | 102 | 105 | 1,037 | 154 | 158 | ||||||||||||||||||||||
Total loans |
22,520 | $ 705 | $685 | 15,678 | $ 729 | $ 701 |
48 |
U.S. Bancorp |
2022 | 2021 | |||||||||||||||||||
(Dollars in Millions) |
Number of Loans |
Amount Defaulted |
Number of Loans |
Amount Defaulted |
||||||||||||||||
Three Months Ended June 30 |
||||||||||||||||||||
Commercial |
175 | $ 3 | 327 | $ 8 | ||||||||||||||||
Commercial real estate |
2 | 1 | 5 | 1 | ||||||||||||||||
Residential mortgages |
79 | 7 | 12 | 1 | ||||||||||||||||
Credit card |
1,727 | 9 | 1,805 | 11 | ||||||||||||||||
Other retail |
60 | 1 | 191 | 3 | ||||||||||||||||
Total loans, excluding loans purchased from GNMA mortgage pools |
2,043 | 21 | 2,340 | 24 | ||||||||||||||||
Loans purchased from GNMA mortgage pools |
120 | 17 | 43 | 6 | ||||||||||||||||
Total loans |
2,163 | $38 | 2,383 | $ 30 | ||||||||||||||||
Six Months Ended June 30 |
||||||||||||||||||||
Commercial |
389 | $ 6 | 612 | $ 24 | ||||||||||||||||
Commercial real estate |
5 | 2 | 12 | 6 | ||||||||||||||||
Residential mortgages |
113 | 10 | 27 | 3 | ||||||||||||||||
Credit card |
3,361 | 18 | 3,569 | 20 | ||||||||||||||||
Other retail |
143 | 2 | 471 | 8 | ||||||||||||||||
Total loans, excluding loans purchased from GNMA mortgage pools |
4,011 | 38 | 4,691 | 61 | ||||||||||||||||
Loans purchased from GNMA mortgage pools |
169 | 25 | 73 | 10 | ||||||||||||||||
Total loans |
4,180 | $63 | 4,764 | $ 71 |
Note 6 |
Accounting for Transfers and Servicing of Financial Assets and Variable Interest Entities |
U.S. Bancorp | 49 |
(Dollars in Millions) | June 30, 2022 |
December 31, 2021 |
||||||
Investment carrying amount |
$ | 4,999 | $ | 4,484 | ||||
Unfunded capital and other commitments |
2,210 | 1,890 | ||||||
Maximum exposure to loss |
9,872 | 9,899 |
5 0 |
U.S. Bancorp |
Note 7 |
Mortgage Servicing Rights |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
Balance at beginning of period |
$ | 3,432 | $ | 2,787 | $ | 2,953 | $ | 2,210 | ||||||||||||
Rights purchased |
3 | 11 | 6 | 27 | ||||||||||||||||
Rights capitalized |
102 | 293 | 339 | 612 | ||||||||||||||||
Rights sold (a) |
— | 1 | 1 | 1 | ||||||||||||||||
Changes in fair value of MSRs |
||||||||||||||||||||
Due to fluctuations in market interest rates (b) |
289 | (232 | ) | 657 | 254 | |||||||||||||||
Due to revised assumptions or models (c) |
6 | (37 | ) | (21 | ) | (139 | ) | |||||||||||||
Other changes in fair value (d) |
(125 | ) | (110 | ) | (228 | ) | (252 | ) | ||||||||||||
Balance at end of period |
$ | 3,707 | $ | 2,713 | $ | 3,707 | $ | 2,713 |
(a) |
MSRs sold include those having a negative fair value, resulting from the loans being severely delinquent. |
(b) |
Includes changes in MSR value associated with changes in market interest rates, including estimated prepayment rates and anticipated earnings on escrow deposits. |
(c) |
Includes changes in MSR value not caused by changes in market interest rates, such as changes in assumed cost to service, ancillary income and option adjusted spread, as well as the impact of any model changes. |
(d) |
Primarily the change in MSR value from passage of time and cash flows realized (decay), but also includes the impact of changes to expected cash flows not associated with changes in market interest rates, such as the impact of delinquencies. |
U.S. Bancorp | 5 1 |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in Millions) | Down 100 bps |
Down 50 bps |
Down 25 bps |
Up 25 bps |
Up 50 bps |
Up 100 bps |
Down 100 bps |
Down 50 bps |
Down 25 bps |
Up 25 bps |
Up 50 bps |
Up 100 bps |
||||||||||||||||||||||||||||||||||||||||
MSR portfolio |
$ | (380) | $ | (172) | $ | (81) | $ | 71 | $ | 133 | $ | 231 | $ | (636) | $ | (324) | $ | (160) | $ | 150 | $ | 287 | $ | 511 | ||||||||||||||||||||||||||||
Derivative instrument hedges |
371 | 170 | 81 | (73) | (141) | (261) | 614 | 309 | 152 | (142) | (278) | (536) | ||||||||||||||||||||||||||||||||||||||||
Net sensitivity |
$ | (9) | $ | (2) | $ | — | $ | (2) | $ | (8) | $ | (30) | $ | (22) | $ | (15) | $ | (8) | $ | 8 | $ | 9 | $ | (25) |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||
(Dollars in Millions) | HFA | Government | Conventional (d) | Total | HFA | Government | Conventional (d) | Total | ||||||||||||||||||||||||||||
Servicing portfolio (a) |
$ | 41,701 | $ | 21,358 | $ | 159,657 | $ | 222,716 | $ | 40,652 | $ | 21,919 | $ | 156,382 | $ | 218,953 | ||||||||||||||||||||
Fair value |
$ | 697 | $ | 403 | $ | 2,607 | $ | 3,707 | $ | 527 | $ | 308 | $ | 2,118 | $ | 2,953 | ||||||||||||||||||||
Value (bps) (b) |
167 | 189 | 163 | 166 | 130 | 141 | 135 | 135 | ||||||||||||||||||||||||||||
Weighted-average servicing fees (bps) |
36 | 41 | 30 | 32 | 36 | 41 | 30 | 32 | ||||||||||||||||||||||||||||
Multiple (value/servicing fees) |
4.65 | 4.59 | 5.41 | 5.15 | 3.63 | 3.43 | 4.50 | 4.18 | ||||||||||||||||||||||||||||
Weighted-average note rate |
4.02 | % | 3.67 | % | 3.40 | % | 3.54 | % | 4.07 | % | 3.70 | % | 3.41 | % | 3.56 | % | ||||||||||||||||||||
Weighted-average age (in years) |
3.9 | 6.0 | 3.5 | 3.8 | 3.8 | 5.9 | 3.3 | 3.7 | ||||||||||||||||||||||||||||
Weighted-average expected prepayment (constant prepayment rate) |
7.5 | % | 8.5 | % | 6.5 | % | 6.9 | % | 11.5 | % | 13.2 | % | 9.6 | % | 10.3 | % | ||||||||||||||||||||
Weighted-average expected life (in years) |
8.6 | 7.4 | 8.2 | 8.2 | 6.5 | 5.6 | 6.9 | 6.7 | ||||||||||||||||||||||||||||
Weighted-average option adjusted spread (c) |
7.2 | % | 6.9 | % | 5.9 | % | 6.2 | % | 7.3 | % | 7.3 | % | 6.3 | % | 6.6 | % |
(a) |
Represents principal balance of mortgages having corresponding MSR asset. |
(b) |
Calculated as fair value divided by the servicing portfolio. |
(c) |
Option adjusted spread is the incremental spread added to the risk-free rate to reflect optionality and other risk inherent in the MSRs. |
(d) |
Represents loans sold primarily to GSEs. |
Note 8 |
Preferred Stock |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||
(Dollars in Millions) | Shares Issued and Outstanding |
Liquidation Preference |
Discount | Carrying Amount |
Shares Issued and Outstanding |
Liquidation Preference |
Discount | Carrying Amount |
||||||||||||||||||||||||||||
Series A |
12,510 | $ | 1,251 | $ | 145 | $ | 1,106 | 12,510 | $ | 1,251 | $ | 145 | $ | 1,106 | ||||||||||||||||||||||
Series B |
40,000 | 1,000 | — | 1,000 | 40,000 | 1,000 | — | 1,000 | ||||||||||||||||||||||||||||
Series J |
40,000 | 1,000 | 7 | 993 | 40,000 | 1,000 | 7 | 993 | ||||||||||||||||||||||||||||
Series K |
23,000 | 575 | 10 | 565 | 23,000 | 575 | 10 | 565 | ||||||||||||||||||||||||||||
Series L |
20,000 | 500 | 14 | 486 | 20,000 | 500 | 14 | 486 | ||||||||||||||||||||||||||||
Series M |
30,000 | 750 | 21 | 729 | 30,000 | 750 | 21 | 729 | ||||||||||||||||||||||||||||
Series N |
60,000 | 1,500 | 8 | 1,492 | 60,000 | 1,500 | 8 | 1,492 | ||||||||||||||||||||||||||||
Series O |
18,000 | 450 | 13 | 437 | — | — | — | — | ||||||||||||||||||||||||||||
Total preferred stock (a) |
243,510 | $ | 7,026 | $ | 218 | $ | 6,808 | 225,510 | $ | 6,576 | $ | 205 | $ | 6,371 |
(a) |
The par value of all shares issued and outstanding at June 30, 2022 and December 31, 2021, was $1.00 per share. |
5 2 |
U.S. Bancorp |
Note 9 |
Accumulated Other Comprehensive Income (Loss) |
Three Months Ended June 30 (Dollars in Millions) |
Unrealized Gains (Losses) on Investment Securities Available-For- Sale |
Unrealized Gains (Losses) on Investment Securities Transferred From Available- For-Sale toHeld-To-Maturity |
Unrealized Gains (Losses) on Derivative Hedges |
Unrealized Gains (Losses) on Retirement Plans |
Foreign Currency Translation |
Total |
||||||||||||||||||
2022 |
||||||||||||||||||||||||
Balance at beginning of period |
$ | (4,518 | ) | $ | (904 | ) | $ | (77 | ) | $ | (1,402 | ) | $ | (37 | ) | $ | (6,938 | ) | ||||||
Changes in unrealized gains (losses) |
(4,761 | ) | — | 98 | — | — | (4,663 | ) | ||||||||||||||||
Transfer of securities from available-for-sale to held-to-maturity |
1,381 |
(1,381 | ) | — |
— |
— |
|
— |
||||||||||||||||
Foreign currency translation adjustment (a) |
— | — | — | — | (3 | ) | (3 | ) | ||||||||||||||||
Reclassification to earnings of realized (gains) losses |
(19 | ) | 61 | 10 | 32 | — | 84 | |||||||||||||||||
Applicable income taxes |
859 | 334 | (27 | ) | (8 | ) | 1 | 1,159 | ||||||||||||||||
Balance at end of period |
$ | (7,058 | ) | $ | (1,890 | ) | $ | 4 | $ | (1,378 | ) | $ | (39 | ) | $ | (10,361 | ) | |||||||
2021 |
||||||||||||||||||||||||
Balance at beginning of period |
$ | (125 | ) | $ | — | $ | (112 | ) | $ | (1,813 | ) | $ | (45 | ) | $ | (2,095 | ) | |||||||
Changes in unrealized gains (losses) |
1,195 | — | 14 | — | — | 1,209 | ||||||||||||||||||
Foreign currency translation adjustment (a) |
— | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||
Reclassification to earnings of realized (gains) losses |
(43 | ) | — | (8 | ) | 40 | — | (11 | ) | |||||||||||||||
Applicable income taxes |
(292 | ) | — | (1 | ) | (10 | ) | (1 | ) | (304 | ) | |||||||||||||
Balance at end of period |
$ | 735 | $ | — | $ | (107 | ) | $ | (1,783 | ) | $ | (47 | ) | $ | (1,202 | ) |
(a) |
Represents the impact of changes in foreign currency exchange rates on the Company’s investment in foreign operations and related hedges. |
Six Months Ended June 30 (Dollars in Millions) |
Unrealized Gains (Losses) on Investment Securities Available-For- Sale |
Unrealized Gains (Losses) on Investment Securities Transferred From Available- For-Sale toHeld-To-Maturity |
Unrealized Gains (Losses) on Derivative Hedges |
Unrealized Gains (Losses) on Retirement Plans |
Foreign Currency Translation |
Total |
||||||||||||||||||
2022 |
||||||||||||||||||||||||
Balance at beginning of period |
$ | 540 | $ | (935 | ) | $ | (85 | ) | $ | (1,426 | ) | $ | (37 | ) | $ | (1,943 | ) | |||||||
Changes in unrealized gains (losses) |
(11,515 | ) | — | 98 | — | — | (11,417 | ) | ||||||||||||||||
Transfer of securities from available-for-sale to held-to-maturity |
1,381 |
(1,381 | ) | — |
— |
— |
|
— |
| |||||||||||||||
Foreign currency translation adjustment (a) |
— | — | — | — | (3 | ) | (3 | ) | ||||||||||||||||
Reclassification to earnings of realized (gains) losses |
(37 | ) | 103 | 21 | 64 | — | 151 | |||||||||||||||||
Applicable income taxes |
2,573 | 323 | (30 | ) | (16 | ) | 1 | 2,851 | ||||||||||||||||
Balance at end of period |
$ | (7,058 | ) | $ | (1,890 | ) | $ | 4 | $ | (1,378 | ) | $ | (39 | ) | $ | (10,361 | ) | |||||||
2021 |
||||||||||||||||||||||||
Balance at beginning of period |
$ | 2,417 | $ | — | $ | (189 | ) | $ | (1,842 | ) | $ | (64 | ) | $ | 322 | |||||||||
Changes in unrealized gains (losses) |
(2,183 | ) | — | 113 | — | — | (2,070 | ) | ||||||||||||||||
Foreign currency translation adjustment (a) |
— | — | — | — | 24 | 24 | ||||||||||||||||||
Reclassification to earnings of realized (gains) losses |
(68 | ) | — | (4 | ) | 79 | — | 7 | ||||||||||||||||
Applicable income taxes |
569 | — | (27 | ) | (20 | ) | (7 | ) | 515 | |||||||||||||||
Balance at end of period |
$ | 735 | $ | — | $ | (107 | ) | $ | (1,783 | ) | $ | (47 | ) | $ | (1,202 | ) |
(a) |
Represents the impact of changes in foreign currency exchange rates on the Company’s investment in foreign operations and related hedges. |
|
U.S. Bancorp |
53 |
Impact to Net Income |
Affected Line Item in the Consolidated Statement of Income | |||||||||||||||||
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||
(Dollars in Millions) |
2022 |
2021 |
2022 |
2021 |
||||||||||||||
Unrealized gains (losses) on investment securities available-for-sale |
||||||||||||||||||
Realized gains (losses) on sale of investment securities |
$ | 19 | $ | 43 | $ | 37 | $ | 68 | Securities gains (losses), net | |||||||||
(5 | ) | (11) | (9) | (17) | Applicable income taxes | |||||||||||||
14 | 32 | 28 | 51 | Net-of-tax | ||||||||||||||
Unrealized gains (losses) on investment securities transferred from available-for-sale held-to-maturity |
||||||||||||||||||
Amortization of unrealized gains |
(61 | ) | — | (103 | ) | — | Interest income | |||||||||||
16 | — | 26 | — | Applicable income taxes | ||||||||||||||
(45 | ) | — | (77) | — | Net-of-tax | |||||||||||||
Unrealized gains (losses) on derivative hedges |
||||||||||||||||||
Realized gains (losses) on derivative hedges |
(10 | ) | 8 | (21 | ) | 4 | Interest expense | |||||||||||
2 | (2) | 5 | (1) | Applicable income taxes | ||||||||||||||
(8) | 6 | (16) | 3 | Net-of-tax | ||||||||||||||
Unrealized gains (losses) on retirement plans |
||||||||||||||||||
Actuarial gains (losses) and prior service cost (credit) amortization |
(32 | ) | (40 | ) | (64 | ) | (79 | ) | Other noninterest expense | |||||||||
8 | 10 | 16 | 20 | Applicable income taxes | ||||||||||||||
(24) | (30) | (48) | (59) | Net-of-tax | ||||||||||||||
Total impact to net income |
$ | (63 | ) | $ | 8 | $ | (113 | ) | $ | (5) |
Note 10 |
Earnings Per Share |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
(Dollars and Shares in Millions, Except Per Share Data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Net income attributable to U.S. Bancorp |
$ | 1,531 | $ | 1,982 | $ | 3,088 | $ | 4,262 | ||||||||
Preferred dividends |
(59 | ) | (58 | ) | (143 | ) | (148 | ) | ||||||||
Impact of preferred stock call (a) |
— | — | — | (5 | ) | |||||||||||
Earnings allocated to participating stock awards |
(8 | ) | (10 | ) | (15 | ) | (20 | ) | ||||||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 1,464 | $ | 1,914 | $ | 2,930 | $ | 4,089 | ||||||||
Average common shares outstanding |
1,486 | 1,489 | 1,485 | 1,495 | ||||||||||||
Net effect of the exercise and assumed purchase of stock awards |
1 | 1 | 1 | 2 | ||||||||||||
Average diluted common shares outstanding |
1,487 | 1,490 | 1,486 | 1,497 | ||||||||||||
Earnings per common share |
$ | .99 | $ | 1.29 | $ | 1.97 | $ | 2.73 | ||||||||
Diluted earnings per common share |
$ | .99 | $ | 1.28 | $ | 1.97 | $ | 2.73 |
(a) |
Represents stock issuance costs originally recorded in preferred stock upon issuance of the Company’s Series I Preferred Stock that were reclassified to retained earnings on the date the Company announced its intent to redeem the outstanding shares. |
Note 11 |
Employee Benefits |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
Pension Plans | Postretirement Welfare Plan |
Pension Plans | Postretirement Welfare Plan |
|||||||||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||
Service cost |
$ | 68 | $ | 66 | $ | — | $ | — | $ | 137 | $ | 132 | $ | — | $ | — | ||||||||||||||||||||
Interest cost |
62 | 55 | — | — | 123 | 110 | — | — | ||||||||||||||||||||||||||||
Expected return on plan assets |
(120 | ) | (113 | ) | — | — | (239 | ) | (225 | ) | — | — | ||||||||||||||||||||||||
Prior service cost (credit) amortization |
— | (1 | ) | (2 | ) | (1 | ) | (1 | ) | (1 | ) | (2 | ) | (2 | ) | |||||||||||||||||||||
Actuarial loss (gain) amortization |
35 | 43 | (1 | ) | (1 | ) | 70 | 85 | (3 | ) | (3 | ) | ||||||||||||||||||||||||
Net periodic benefit cost (a) |
$ | 45 | $ | 50 | $ | (3 | ) | $ | (2 | ) | $ | 90 | $ | 101 | $ | (5 | ) | $ | (5 | ) |
(a) |
Service cost is included in employee benefits expense on the Consolidated Statement of Income. All other components are included in other noninterest expense on the Consolidated Statement of Income. |
5 4 |
U.S. Bancorp |
Note 12 |
Income Taxes |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
Federal |
||||||||||||||||||||
Current |
$ | 221 | $ | 350 | $ | 625 | $ | 703 | ||||||||||||
Deferred |
107 | 76 | 5 | 206 | ||||||||||||||||
Federal income tax |
328 | 426 | 630 | 909 | ||||||||||||||||
State |
||||||||||||||||||||
Current |
89 | 109 | 178 | 203 | ||||||||||||||||
Deferred |
(3 | ) | 16 | 3 | 46 | |||||||||||||||
State income tax |
86 | 125 | 181 | 249 | ||||||||||||||||
Total income tax provision |
$ | 414 | $ | 551 | $ | 811 | $ | 1,158 |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
Tax at statutory rate |
$ |
409 |
$ |
533 |
$ |
820 |
$ |
1,140 |
||||||||||||
State income tax, at statutory rates, net of federal tax benefit |
84 | 105 | 168 | 219 | ||||||||||||||||
Tax effect of |
||||||||||||||||||||
Tax credits and benefits, net of related expenses |
(46 | ) | (83 | ) | (152 | ) | (176 | ) | ||||||||||||
Tax-exempt income |
(29 | ) | (29 | ) | (57 | ) | (57 | ) | ||||||||||||
Other items |
(4 | ) | 25 | 32 | 32 | |||||||||||||||
Applicable income taxes |
$ | 414 | $ | 551 | $ | 811 | $ | 1,158 |
Note 13 |
Derivative Instruments |
U.S. Bancorp | 5 5 |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||
Notional Value |
Fair Value | Notional Value |
Fair Value | |||||||||||||||||||||||||
(Dollars in Millions) | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||
Fair value hedges |
||||||||||||||||||||||||||||
Interest rate contracts |
||||||||||||||||||||||||||||
Receive fixed/pay floating swaps |
$ | 17,400 | $ | — | $ | — | $ | 12,350 | $ | — | $ | — | ||||||||||||||||
Pay fixed/receive floating swaps |
3,820 | — | — | 16,650 | — | — | ||||||||||||||||||||||
Cash flow hedges |
||||||||||||||||||||||||||||
Interest rate contract s |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receive fixed/pay floating swaps |
8,300 | — | — | — | — | — | ||||||||||||||||||||||
Net investment hedges |
||||||||||||||||||||||||||||
Foreign exchange forward contracts |
805 | 6 | 1 | 793 | — | 4 | ||||||||||||||||||||||
Other economic hedges |
||||||||||||||||||||||||||||
Interest rate contracts |
||||||||||||||||||||||||||||
Futures and forwards |
||||||||||||||||||||||||||||
Buy |
11,040 | 30 | 63 | 9,322 | 10 | 16 | ||||||||||||||||||||||
Sell |
9,811 | 34 | 31 | 29,348 | 25 | 27 | ||||||||||||||||||||||
Options |
||||||||||||||||||||||||||||
Purchased |
7,480 | 260 | — | 18,570 | 256 | — | ||||||||||||||||||||||
Written |
7,208 | 20 | 93 | 9,662 | 52 | 231 | ||||||||||||||||||||||
Receive fixed/pay floating swaps |
11,420 | — | — | 9,653 | — | — | ||||||||||||||||||||||
Pay fixed/receive floating swaps |
12,481 | — | — | 7,033 | — | — | ||||||||||||||||||||||
Foreign exchange forward contracts |
852 | 5 | 2 | 735 | 2 | 6 | ||||||||||||||||||||||
Equity contracts |
186 | 4 | — | 209 | 5 | — | ||||||||||||||||||||||
Other (a) |
2,344 | 2 | 81 | 1,792 | — | 125 | ||||||||||||||||||||||
Total |
$ | 93,147 | $ | 361 | $ | 271 | $ | 116,117 | $ | 350 | $ | 409 |
(a) |
Includes derivative liability swap agreements related to the sale of a portion of the Company’s Class B common and preferred shares of Visa Inc. The Visa swap agreements had a total notional value and fair value of $1.8 billion and $79 million at June 30, 2022, respectively, compared to $1.8 billion and $125 million at December 31, 2021, respectively. In addition, includes short-term underwriting purchase and sale commitments with total notional values of $565 million at June 30, 2022, and $8 million at December 31, 2021. |
5 6 |
U.S. Bancorp |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||
Notional Value |
Fair Value | Notional Value |
Fair Value | |||||||||||||||||||||||||
(Dollars in Millions) | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||
Interest rate contracts |
||||||||||||||||||||||||||||
Receive fixed/pay floating swaps |
$ | 204,454 | $ | 458 | $ | 3,125 | $ | 178,701 | $ | 2,007 | $ | 438 | ||||||||||||||||
Pay fixed/receive floating swaps |
193,869 | 1,308 | 214 | 174,176 | 134 | 670 | ||||||||||||||||||||||
Other (a) |
19,451 | 1 | 3 | 16,267 | 1 | 2 | ||||||||||||||||||||||
Options |
||||||||||||||||||||||||||||
Purchased |
90,183 | 993 | 5 | 89,679 | 194 | 36 | ||||||||||||||||||||||
Written |
87,585 | 6 | 979 | 85,211 | 36 | 176 | ||||||||||||||||||||||
Futures |
||||||||||||||||||||||||||||
Buy |
475 | — | — | 3,607 | — | — | ||||||||||||||||||||||
Sell |
4,928 | — | — | 3,941 | — | — | ||||||||||||||||||||||
Foreign exchange rate contracts |
||||||||||||||||||||||||||||
Forwards, spots and swaps |
95,611 | 2,222 | 2,239 | 89,321 | 1,145 | 1,143 | ||||||||||||||||||||||
Options |
||||||||||||||||||||||||||||
Purchased |
861 | 39 | — | 805 | 19 | — | ||||||||||||||||||||||
Written |
861 | — | 39 | 805 | — | 19 | ||||||||||||||||||||||
Credit contracts |
9,152 | 1 | 6 | 9,331 | 1 | 5 | ||||||||||||||||||||||
Total |
$ | 707,430 | $ | 5,028 | $ | 6,610 | $ | 651,844 | $ | 3,537 | $ | 2,489 |
(a) |
Primarily represents floating rate interest rate swaps that pay based on differentials between specified interest rate indexes. |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
Gains (Losses) Recognized in Other Comprehensive Income (Loss) |
Gains (Losses) Reclassified from Other Comprehensive Income (Loss) into Earnings |
Gains (Losses) Recognized in Other Comprehensive Income (Loss) |
Gains (Losses) Reclassified from Other Comprehensive Income (Loss) into Earnings |
|||||||||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||
Asset and Liability Management Positions |
||||||||||||||||||||||||||||||||||||
Cash flow hedges |
||||||||||||||||||||||||||||||||||||
Interest rate contracts |
$ | 73 | $ | 11 | $ | (8 | ) | $ | 6 | $ | 73 | $ | 85 | $ | (16 | ) | $ | 3 | ||||||||||||||||||
Net investment hedges |
||||||||||||||||||||||||||||||||||||
Foreign exchange forward contracts |
27 | (8 | ) | — | — | 26 | (1 | ) | — | — | ||||||||||||||||||||||||||
Non-derivative debt instruments |
63 | (14 | ) | — | — | 83 | 34 | — | — |
Note: |
The Company does not exclude components from effectiveness testing for cash flow and net investment hedges. |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
Interest Income | Interest Expense | Interest Income | Interest Expense | |||||||||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||
Total amount of income and expense line items presented in the Consolidated Statement of Income in which the effects of fair value or cash flow hedges are recorded |
$ | 3,825 | $ | 3,382 | $ | 390 | $ | 245 | $ | 7,243 | $ | 6,723 | $ | 635 | $ | 523 | ||||||||||||||||||||
Asset and Liability Management Positions |
||||||||||||||||||||||||||||||||||||
Fair value hedges |
||||||||||||||||||||||||||||||||||||
Interest rate contract derivatives |
(186 | ) | (30 | ) | (38 | ) | 18 | 331 | (31 | ) | 34 | 73 | ||||||||||||||||||||||||
Hedged items |
187 | 29 | 36 | (17 | ) | (331 | ) | 30 | (35 | ) | (72 | ) | ||||||||||||||||||||||||
Cash flow hedges |
||||||||||||||||||||||||||||||||||||
Interest rate contract derivatives |
— | — | 10 | (8 | ) | — | — | 21 | (4 | ) |
Note: |
The Company does not exclude components from effectiveness testing for fair value and cash flow hedges. The Company reclassified losses of $10 million and $21 million into earnings during the three and six months ended June 30, 2022, respectively, as a result of realized cash flows on discontinued cash flow hedges, compared with $12 million and $27 million during the three and six months ended June 30, 2021, respectively. No amounts were reclassified into earnings on discontinued cash flow hedges because it is probable the original hedged forecasted cash flows will not occur. |
U.S. Bancorp | 5 7 |
Carrying Amount of the Hedged Assets and Liabilities |
Cumulative Hedging Adjustment (a) | |||||||||||||||||||
At December 31 (Dollars in Millions) | June 30, 2022 | December 31, 2021 | June 30, 2022 | December 31, 2021 | ||||||||||||||||
Line Item in the Consolidated Balance Sheet |
||||||||||||||||||||
Available-for-sale |
$ | 3,124 | $ | 16,445 | $ | (716 | ) | $ | (26 | ) | ||||||||||
Long-term debt |
17,724 | 12,278 | 378 | 585 |
(a) |
The cumulative hedging adjustment related to discontinued hedging relationships on available-for-sale |
Location of Gains (Losses) Recognized in Earnings |
Three Months Ended June 30 |
Six Months Ended June 30 |
||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Asset and Liability Management Positions |
||||||||||||||||||||||||
Other economic hedges |
||||||||||||||||||||||||
Interest rate contracts |
||||||||||||||||||||||||
Futures and forwards |
Mortgage banking revenue |
$ |
74 |
$ |
(99 |
) |
$ |
297 |
$ |
331 |
||||||||||||||
Purchased and written options |
Mortgage banking revenue | 6 | 253 | (41 | ) | 265 | ||||||||||||||||||
Swaps |
Mortgage banking revenue | (247 | ) | 193 | (451 | ) | (197 | ) | ||||||||||||||||
Foreign exchange forward contracts |
Other noninterest income | 4 | (7 | ) | 1 | (10 | ) | |||||||||||||||||
Equity contracts |
Compensation expense |
(1 |
) |
1 |
(3 |
) |
5 |
|||||||||||||||||
Other |
Other noninterest income | 1 | 1 | — | 1 | |||||||||||||||||||
Customer-Related Positions |
||||||||||||||||||||||||
Interest rate contracts |
||||||||||||||||||||||||
Swaps |
Commercial products revenue |
30 |
25 |
47 |
52 |
|||||||||||||||||||
Purchased and written options |
Commercial products revenue | — | 4 | 4 | (3 | ) | ||||||||||||||||||
Futures |
Commercial products revenue | 8 | — | 24 | — | |||||||||||||||||||
Foreign exchange rate contracts |
||||||||||||||||||||||||
Forwards, spots and swaps |
Commercial products revenue | 20 | 27 | 35 | 46 | |||||||||||||||||||
Purchased and written option s |
Commercial products revenue |
1 |
— |
1 |
— |
|||||||||||||||||||
Credit contracts |
Commercial products revenue | 17 | (4 | ) | 22 | (2 | ) |
Note 14 |
Netting Arrangements for Certain Financial Instruments and Securities Financing Activities | |
58 |
U.S. Bancorp |
U.S. Bancorp | 59 |
(Dollars in Millions) | Overnight and Continuous |
Less Than 30 Days |
30-89 Days |
Greater Than 90 Days |
Total | |||||||||||||||
June 30, 2022 |
||||||||||||||||||||
Repurchase agreements |
||||||||||||||||||||
U.S. Treasury and agencies |
$ | 429 | $ | – | $ | – | $ | – | $ | 429 | ||||||||||
Residential agency mortgage-backed securities |
969 | – | – | – | 969 | |||||||||||||||
Corporate debt securities |
597 | – | – | – | 597 | |||||||||||||||
Total repurchase agreements |
1,995 | – | – | – | 1,995 | |||||||||||||||
Securities loaned |
||||||||||||||||||||
Corporate debt securities |
225 | – | – | – | 225 | |||||||||||||||
Total securities loaned |
225 | – | – | – | 225 | |||||||||||||||
Gross amount of recognized liabilities |
$ | 2,220 | $ | – | $ | – | $ | – | $ | 2,220 | ||||||||||
December 31, 2021 |
||||||||||||||||||||
Repurchase agreements |
||||||||||||||||||||
U.S. Treasury and agencies |
$ | 378 | $ | – | $ | – | $ | – | $ | 378 | ||||||||||
Residential agency mortgage-backed securities |
551 | – | – | – | 551 | |||||||||||||||
Corporate debt securities |
646 | – | – | – | 646 | |||||||||||||||
Total repurchase agreements |
1,575 | – | – | – | 1,575 | |||||||||||||||
Securities loaned |
||||||||||||||||||||
Corporate debt securities |
169 | – | – | – | 169 | |||||||||||||||
Total securities loaned |
169 | – | – | – | 169 | |||||||||||||||
Gross amount of recognized liabilities |
$ | 1,744 | $ | – | $ | – | $ | – | $ | 1,744 |
(Dollars in Millions) | Gross Recognized Assets |
Gross Amounts Offset on the Consolidated Balance Sheet (a) |
Net Amounts Presented on the Consolidated Balance Sheet |
Gross Amounts Not Offset on the Consolidated Balance Sheet |
Net Amount | |||||||||||||||||||
Financial Instruments (b) |
Collateral Received (c) |
|||||||||||||||||||||||
June 30, 2022 |
||||||||||||||||||||||||
Derivative assets (d) |
$ | 5,359 | $ | (3,503 | ) | $ | 1,856 | $ | (175 | ) | $ | (66 | ) | $ | 1,615 | |||||||||
Reverse repurchase agreements |
513 | – | 513 | (386 | ) | (127 | ) | – | ||||||||||||||||
Securities borrowed |
1,657 | – | 1,657 | – | (1,609 | ) | 48 | |||||||||||||||||
Total |
$ | 7,529 | $ | (3,503 | ) | $ | 4,026 | $ | (561 | ) | $ | (1,802 | ) | $ | 1,663 | |||||||||
December 31, 2021 |
||||||||||||||||||||||||
Derivative assets (d) |
$ | 3,830 | $ | (1,609 | ) | $ | 2,221 | $ | (142 | ) | $ | (106 | ) | $ | 1,973 | |||||||||
Reverse repurchase agreements |
359 | – | 359 | (249 | ) | (110 | ) | – | ||||||||||||||||
Securities borrowed |
1,868 | – | 1,868 | – | (1,818 | ) | 50 | |||||||||||||||||
Total |
$ | 6,057 | $ | (1,609 | ) | $ | 4,448 | $ | (391 | ) | $ | (2,034 | ) | $ | 2,023 |
(a) |
Includes $2.0 billion and $528 million of cash collateral related payables that were netted against derivative assets at June 30, 2022 and December 31, 2021, respectively. |
(b) |
For derivative assets this includes any derivative liability fair values that could be offset in the event of counterparty default; for reverse repurchase agreements this includes any repurchase agreement payables that could be offset in the event of counterparty default; for securities borrowed this includes any securities loaned payables that could be offset in the event of counterparty default. |
(c) |
Includes the fair value of securities received by the Company from the counterparty. These securities are not included on the Consolidated Balance Sheet unless the counterparty defaults. |
(d) |
Excludes $30 million and $57 million at June 30, 2022 and December 31, 2021, respectively, of derivative assets not subject to netting arrangements. |
6 0 |
U.S. Bancorp |
(Dollars in Millions) |
Gross Recognized Liabilities |
Gross Amounts Offset on the Consolidated Balance Sheet (a) |
Net Amounts Presented on the Consolidated Balance Sheet |
Gross Amounts Not Offset on the Consolidated Balance Sheet |
||||||||||||||||||||
Financial Instruments (b) |
Collateral Pledged (c) |
Net Amount |
||||||||||||||||||||||
June 30, 2022 |
||||||||||||||||||||||||
Derivative liabilities (d) |
$ | 6,771 | $ | (2,639 | ) | $ | 4,132 | $ | (175 | ) | $ | – | $ | 3,957 | ||||||||||
Repurchase agreements |
1,995 | – | 1,995 | (386 | ) | (1,609 | ) | – | ||||||||||||||||
Securities loaned |
225 | – | 225 | – | (223 | ) | 2 | |||||||||||||||||
Total |
$ | 8,991 | $ | (2,639 | ) | $ | 6,352 | $ | (561 | ) | $ | (1,832 | ) | $ | 3,959 | |||||||||
December 31, 2021 |
||||||||||||||||||||||||
Derivative liabilities (d) |
$ | 2,761 | $ | (1,589 | ) | $ | 1,172 | $ | (142 | ) | $ | – | $ | 1,030 | ||||||||||
Repurchase agreements |
1,575 | – | 1,575 | (249 | ) | (1,326 | ) | – | ||||||||||||||||
Securities loaned |
169 | – | 169 | – | (167 | ) | 2 | |||||||||||||||||
Total |
$ | 4,505 | $ | (1,589 | ) | $ | 2,916 | $ | (391 | ) | $ | (1,493 | ) | $ | 1,032 |
(a) |
Includes $1.2 billion and $508 million of cash collateral related receivables that were netted against derivative liabilities at June 30, 2022 and December 31, 2021, respectively. |
(b) |
For derivative liabilities this includes any derivative asset fair values that could be offset in the event of counterparty default; for repurchase agreements this includes any reverse repurchase agreement receivables that could be offset in the event of counterparty default; for securities loaned this includes any securities borrowed receivables that could be offset in the event of counterparty default. |
(c) |
Includes the fair value of securities pledged by the Company to the counterparty. These securities are included on the Consolidated Balance Sheet unless the Company defaults. |
(d) |
Excludes $110 million and $137 million at June 30, 2022 and December 31, 2021, respectively, of derivative liabilities not subject to netting arrangements. |
Note 15 |
Fair Values of Assets and Liabilities |
• | Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 1 includes U.S. Treasury securities, as well as exchange-traded instruments. |
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and which are typically valued using third party pricing services; derivative contracts and other assets and liabilities, including securities, whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data; and MLHFS whose values are determined using quoted prices for similar assets or pricing models with inputs that are observable in the market or can be corroborated by observable market data. |
• | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category includes MSRs and certain derivative contracts. |
U.S. Bancorp | 6 1 |
6 2 |
U.S. Bancorp |
Minimum | Maximum | Weighted- Average (a) |
||||||||||
Expected prepayment |
5 | % | 10 | % | 7 | % | ||||||
Option adjusted spread |
5 | 11 | 6 |
(a) |
Determined based on the relative fair value of the related mortgage loans serviced. |
Minimum |
Maximum |
Weighted- Average (a) |
||||||||||
Expected loan close rate |
29 | % | 100 | % | 80 | % | ||||||
Inherent MSR value (basis points per loan) |
37 |
219 | 108 |
(a) |
Determined based on the relative fair value of the related mortgage loans. |
U.S. Bancorp | 6 3 |
(Dollars in Millions) |
Level 1 |
Level 2 |
Level 3 |
Netting |
Total |
|||||||||||||||
June 30, 2022 |
||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||
U.S. Treasury and agencies |
$ | 18,539 | $ | 5,228 | $ | – | $ | – | $ | 23,767 | ||||||||||
Mortgage-backed securities |
||||||||||||||||||||
Residential agency |
– | 57,752 | – | – | 57,752 | |||||||||||||||
Commercial agency |
– | 7,564 | – | – | 7,564 | |||||||||||||||
Obligations of state and political subdivisions |
– | 9,715 | 1 | – | 9,716 | |||||||||||||||
Other |
– | 7 | – | – | 7 | |||||||||||||||
Total available-for-sale |
18,539 | 80,266 | 1 | – | 98,806 | |||||||||||||||
Mortgage loans held for sale |
– | 2,773 | – | – | 2,773 | |||||||||||||||
Mortgage servicing rights |
– | – | 3,707 | – | 3,707 | |||||||||||||||
Derivative assets |
– | 4,555 | 834 | (3,503 | ) | 1,886 | ||||||||||||||
Other assets |
187 | 1,830 | – | – | 2,017 | |||||||||||||||
Total |
$ | 18,726 | $ | 89,424 | $ | 4,542 | $ |
(3,503 | ) |
$ | 109,189 | |||||||||
Derivative liabilities |
$ | – | $ | 3,872 | $ | 3,009 | $ |
(2,639 |
) |
$ | 4,242 | |||||||||
Short-term borrowings and other liabilities (a) |
190 | 1,645 | – | – | 1,835 | |||||||||||||||
Total |
$ | 190 | $ | 5,517 | $ | 3,009 | $ |
(2,639 | ) | $ | 6,077 | |||||||||
December 31, 2021 |
||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||
U.S. Treasury and agencies |
$ | 30,917 | $ | 5,692 | $ | – | $ | – | $ | 36,609 | ||||||||||
Mortgage-backed securities |
||||||||||||||||||||
Residential agency |
– | 77,079 | – | – | 77,079 | |||||||||||||||
Commercial agency |
– | 8,485 | – | – | 8,485 | |||||||||||||||
Asset-backed securities |
– | 59 | 7 | – | 66 | |||||||||||||||
Obligations of state and political subdivisions |
– | 10,716 | 1 | – | 10,717 | |||||||||||||||
Other |
– | 7 | – | – | 7 | |||||||||||||||
Total available-for-sale |
30,917 | 102,038 | 8 | – | 132,963 | |||||||||||||||
Mortgage loans held for sale |
– | 6,623 | – | – | 6,623 | |||||||||||||||
Mortgage servicing rights |
– | – | 2,953 | – | 2,953 | |||||||||||||||
Derivative assets |
8 | 2,490 | 1,389 | (1,609 | ) | 2,278 | ||||||||||||||
Other assets |
278 | 1,921 | — | — | 2,199 | |||||||||||||||
Total |
$ | 31,203 | $ | 113,072 | $ | 4,350 | $ | (1,609 | ) | $ | 147,016 | |||||||||
Derivative liabilities |
$ | — | $ | 2,308 | $ | 590 | $ | (1,589 | ) | $ | 1,309 | |||||||||
Short-term borrowings and other liabilities (a) |
209 | 1,837 | — | — | 2,046 | |||||||||||||||
Total |
$ | 209 | $ | 4,145 | $ | 590 | $ | (1,589 | ) | $ | 3,355 |
Note: |
Excluded from the table above are equity investments without readily determinable fair values. The Company has elected to carry these investments at historical cost, adjusted for impairment and any changes resulting from observable price changes for identical or similar investments of the issuer. The aggregate carrying amount of these equity investments was $80 million and $79 million at June 30, 2022 and December 31, 2021, respectively. The Company has not recorded impairments or adjustments for observable price changes on these equity investments during the first six months of 2022 and 2021, or on a cumulative basis. |
(a) |
Primarily represents the Company’s obligation on securities sold short required to be accounted for at fair value per applicable accounting guidance. |
6 4 |
U.S. Bancorp |
(Dollars in Millions) | Beginning of Period Balance |
Net Gains (Losses) Included in Net Income |
Net Gains (Losses) Included in Other Comprehensive Income (Loss) |
Purchases | Sales | Issuances | Settlements | End of Period Balance |
Net Change in Unrealized Gains (Losses) Relating to Assets and Liabilities Held at End of Period |
|||||||||||||||||||||||||||
2022 |
||||||||||||||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||||||
Asset-backed securities |
$ | 7 | $ | (3 | ) | $ | – | $ | – | $ | (4 | ) | $ | – | $ | – | $ | – | $ | – | ||||||||||||||||
Obligations of state and political subdivisions |
1 | – | – | – | – | – | – | 1 | – | |||||||||||||||||||||||||||
Total available-for-sale |
8 | (3 | ) | – | – | (4 | ) | – | – | 1 | – | |||||||||||||||||||||||||
Mortgage servicing rights |
3,432 | 170 | (a) | – | 3 | – | 102 | (c) | – | 3,707 | 170 | (a) | ||||||||||||||||||||||||
Net derivative assets and liabilities |
(1,011 | ) | (1,494 | ) (b) | – | 81 | – | – | 249 | (2,175 | ) | (1,259 | ) (d) | |||||||||||||||||||||||
2021 |
||||||||||||||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||||||
Asset-backed securities |
$ | 7 | $ | – | $ | 1 | $ | – | $ | – | $ | – | $ | – | $ | 8 | $ | 1 | ||||||||||||||||||
Obligations of state and political subdivisions |
1 | – | – | – | – | – | – | 1 | – | |||||||||||||||||||||||||||
Total available-for-sale |
8 | – | 1 | – | – | – | – | 9 | 1 | |||||||||||||||||||||||||||
Mortgage servicing rights |
2,787 | (379 | ) (a) | – | 11 | 1 | 293 | (c) | – | 2,713 | (379 | ) (a) | ||||||||||||||||||||||||
Net derivative assets and liabilities |
1,156 | 556 | (e) | – | 58 | (1 | ) | – | (269 | ) | 1,500 | 412 | (f) |
(a) |
Included in mortgage banking revenue. |
(b) |
Approximately $(20) million, $(1.5) billion and $1 million included in mortgage banking revenue, commercial products revenue and other noninterest income, respectively. |
(c) |
Represents MSRs capitalized during the period. |
(d) |
Approximately $(3) million, $(1.3) billion and $1 million included in mortgage banking revenue, commercial products revenue and other noninterest income, respectively. |
(e) |
Approximately $276 million, $279 million and $1 million included in mortgage banking revenue, commercial products revenue and other noninterest income, respectively. |
(f) |
Approximately $100 million, $311 million and $1 million included in mortgage banking revenue, commercial products revenue and other noninterest income, respectively. |
(Dollars in Millions) | Beginning of Period Balance |
Net Gains (Losses) Included in Net Income |
Net Gains (Losses) Included in Other Comprehensive Income (Loss) |
Purchases | Sales | Issuances | Settlements | End of Period Balance |
Net Change in Unrealized Gains (Losses) Relating to Assets and Liabilities Held at End of Period |
|||||||||||||||||||||||||||
2022 |
||||||||||||||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||||||
Asset-backed securities |
$ | 7 | $ | (3 | ) | $ | – | $ | – | $ | (4 | ) | $ | – | $ | – | $ | – | $ | – | ||||||||||||||||
Obligations of state and political subdivisions |
1 | – | – | – | – | – | – | 1 | – | |||||||||||||||||||||||||||
Total available-for-sale |
8 | (3 | ) | – | – | (4 | ) | – | – | 1 | – | |||||||||||||||||||||||||
Mortgage servicing rights |
2,953 | 408 | (a) | – | 6 | 1 | 339 | (c) | – | 3,707 | 408 | (a) | ||||||||||||||||||||||||
Net derivative assets and liabilities |
799 | (3,361 | ) (b) | – | 92 | (1 | ) | – | 296 | (2,175 | ) | (2,739 | ) (d) | |||||||||||||||||||||||
2021 |
||||||||||||||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||||||
Asset-backed securities |
$ | 7 | $ | – | $ | 1 | $ | – | $ | – | $ | – | $ | – | $ | 8 | $ | 1 | ||||||||||||||||||
Obligations of state and political subdivisions |
1 | – | – | – | – | – | – | 1 | – | |||||||||||||||||||||||||||
Total available-for-sale |
8 | – | 1 | – | – | – | – | 9 | 1 | |||||||||||||||||||||||||||
Mortgage servicing rights |
2,210 | (137 | ) (a) | – | 27 | 1 | 612 | (c) | – | 2,713 | (137 | ) (a) | ||||||||||||||||||||||||
Net derivative assets and liabilities |
2,326 | (379 | ) (e) | – | 60 | (1 | ) | – | (506 | ) | 1,500 | (496 | ) (f) |
(a) |
Included in mortgage banking revenue. |
(b) |
Approximately $(103) million and $(3.3) billion included in mortgage banking revenue and commercial products revenue, respectively. |
(c) |
Represents MSRs capitalized during the period. |
(d) |
Approximately $(3) million and $(2.7) billion included in mortgage banking revenue and commercial products revenue, respectively. |
(e) |
Approximately $336 million, $(716) million and $1 million included in mortgage banking revenue, commercial products revenue and other noninterest income, respectively. |
(f) |
Approximately $100 million, $(597) million and $1 million included in mortgage banking revenue, commercial products revenue and other noninterest income, respectively. |
U.S. Bancorp | 6 5 |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
(Dollars in Millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Loans (a) |
$ | – | $ | – | $ | 69 | $ | 69 | $ | – | $ | – | $ | 59 | $ | 59 | ||||||||||||||||
Other assets (b) |
– | – | 28 | 28 | – | – | 77 | 77 |
(a) |
Represents the carrying value of loans for which adjustments were based on the fair value of the collateral, excluding loans fully charged-off. |
(b) |
Primarily represents the fair value of foreclosed properties that were measured at fair value based on an appraisal or broker price opinion of the collateral subsequent to their initial acquisition. |
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
(Dollars in Millions) |
2022 | 2021 | 2022 | 2021 | ||||||||||||
Loans (a) |
$ | 22 | $ | 12 | $ | 33 | $ | 43 | ||||||||
Other assets (b) |
10 | 5 | 11 | 6 |
(a) |
Represents write-downs of loans which were based on the fair value of the collateral, excluding loans fully charged-off. |
(b) |
Primarily represents related losses of foreclosed properties that were measured at fair value subsequent to their initial acquisition. |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||
(Dollars in Millions) | Fair Value Carrying Amount |
Aggregate Unpaid Principal |
Carrying Amount Over (Under) Unpaid Principal |
Fair Value Carrying Amount |
Aggregate Unpaid Principal |
Carrying Amount Over (Under) Unpaid Principal |
||||||||||||||||||||||
Total loans |
$ | 2,773 | $ | 2,753 | $ | 20 | $ | 6,623 | $ | 6,453 | $ | 170 | ||||||||||||||||
Nonaccrual loans |
1 | 1 | – | 1 | 1 | – | ||||||||||||||||||||||
Loans 90 days or more past due |
1 | 1 | – | 2 | 2 | – |
6 6 |
U.S. Bancorp |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount |
Fair Value | Carrying Amount |
Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in Millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||||
Financial Assets |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and due from banks |
$ | 39,124 | $ | 39,124 | $ | – | $ | – | $ | 39,124 | $ | 28,905 | $ | 28,905 | $ | – | $ | – | $ | 28,905 | ||||||||||||||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements |
520 | – | 520 | – | 520 | 359 | – | 359 | – | 359 | ||||||||||||||||||||||||||||||||||||||||||
Investment securities held-to-maturity |
61,503 | 1,337 | 54,320 | – | 55,657 | 41,858 | – | 41,812 | – | 41,812 | ||||||||||||||||||||||||||||||||||||||||||
Loans held for sale (a) |
1,170 | – | – | 1,170 | 1,170 | 1,152 | – | – | 1,152 | 1,152 | ||||||||||||||||||||||||||||||||||||||||||
Loans |
326,537 | – | – | 321,095 | 321,095 | 306,304 | – | – | 312,724 | 312,724 | ||||||||||||||||||||||||||||||||||||||||||
Other (b) |
2,391 | – | 1,679 | 712 | 2,391 | 1,521 | – | 630 | 891 | 1,521 | ||||||||||||||||||||||||||||||||||||||||||
Financial Liabilities |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Time deposits |
30,622 | – | 30,039 | – | 30,039 | 22,665 | – | 22,644 | – | 22,644 | ||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings (c) |
23,128 | – | 22,789 | – | 22,789 | 9,750 | – | 9,646 | – | 9,646 | ||||||||||||||||||||||||||||||||||||||||||
Long-term debt |
29,408 | – | 27,901 | – | 27,901 | 32,125 | – | 32,547 | – | 32,547 | ||||||||||||||||||||||||||||||||||||||||||
Other (d) |
3,896 | – | 1,135 | 2,761 | 3,896 | 3,862 | – | 1,170 | 2,692 | 3,862 |
(a) |
Excludes mortgages held for sale for which the fair value option under applicable accounting guidance was elected. |
(b) |
Includes investments in Federal Reserve Bank and Federal Home Loan Bank stock and tax-advantaged investments. |
(c) |
Excludes the Company’s obligation on securities sold short required to be accounted for at fair value per applicable accounting guidance. |
(d) |
Includes operating lease liabilities and liabilities related to tax-advantaged investments. |
Note 16 |
Guarantees and Contingent Liabilities |
U.S. Bancorp | 6 7 |
(Dollars in Millions) | Collateral Held |
Carrying Amount |
Maximum Potential Future Payments |
|||||||||
Standby letters of credit |
$ | — | $ | 55 | $ | 9,844 | ||||||
Third party borrowing arrangements |
— | — | 7 | |||||||||
Securities lending indemnifications |
7,822 | — | 7,461 | |||||||||
Asset sales |
— | 85 | 7,629 | (a) | ||||||||
Merchant processing |
1,415 | 118 | 141,453 | |||||||||
Tender option bond program guarantee |
1,521 | — | 1,489 | |||||||||
Other |
— | 21 | 1,343 |
(a) |
The maximum potential future payments do not include loan sales where the Company provides standard representation and warranties to the buyer against losses related to loan underwriting documentation defects that may have existed at the time of sale that generally are identified after the occurrence of a triggering event such as delinquency. For these types of loan sales, the maximum potential future payments is generally the unpaid principal balance of loans sold measured at the end of the current reporting period. Actual losses will be significantly less than the maximum exposure, as only a fraction of loans sold will have a representation and warranty breach, and any losses on repurchase would generally be mitigated by any collateral held against the loans. |
68 |
U.S. Bancorp |
Note 17 |
Business Segments |
U.S. Bancorp | 69 |
7 0 |
U.S. Bancorp |
Corporate and Commercial Banking |
Consumer and Business Banking |
Wealth Management and Investment Services |
||||||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 784 | $ | 726 | $ | 1,617 | $ | 1,534 | $ | 352 | $ | 246 | ||||||||||||||||||||
Noninterest income |
272 | 265 | 395 | 634 | 652 | 549 | ||||||||||||||||||||||||||
Total net revenue |
1,056 | 991 | 2,012 | 2,168 | 1,004 | 795 | ||||||||||||||||||||||||||
Nointerest expense |
453 | 433 | 1,419 | 1,375 | 581 | 521 | ||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
603 | 558 | 593 | 793 | 423 | 274 | ||||||||||||||||||||||||||
Provision for credit losses |
100 | — | (75 | ) | (68 | ) | (4 | ) | (4 | ) | ||||||||||||||||||||||
Income (loss) before income taxes |
503 | 558 | 668 | 861 | 427 | 278 | ||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
126 | 140 | 167 | 215 | 107 | 70 | ||||||||||||||||||||||||||
Net income (loss) |
377 | 418 | 501 | 646 | 320 | 208 | ||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 377 | $ | 418 | $ | 501 | $ | 646 | $ | 320 | $ | 208 | ||||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||
Loans |
$ | 123,210 | $ | 102,275 | $ | 141,135 | $ | 140,826 | $ | 22,320 | $ | 17,442 | ||||||||||||||||||||
Other earning assets |
4,161 | 4,409 | 2,579 | 8,018 | 251 | 237 | ||||||||||||||||||||||||||
Goodwill |
1,912 | 1,647 | 3,244 | 3,476 | 1,718 | 1,618 | ||||||||||||||||||||||||||
Other intangible assets |
4 | 5 | 3,634 | 2,828 | 300 | 84 | ||||||||||||||||||||||||||
Assets |
137,773 | 114,186 | 156,132 | 161,695 | 25,786 | 20,470 | ||||||||||||||||||||||||||
Noninterest-bearing deposits |
58,266 | 60,696 | 31,642 | 33,702 | 25,019 | 23,288 | ||||||||||||||||||||||||||
Interest-bearing deposits |
93,678 | 70,019 | 168,486 | 158,164 | 71,759 | 73,347 | ||||||||||||||||||||||||||
Total deposits |
151,944 | 130,715 | 200,128 | 191,866 | 96,778 | 96,635 | ||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
13,989 | 13,816 | 12,366 | 12,337 | 3,618 | 3,089 | ||||||||||||||||||||||||||
Payment Services |
Treasury and Corporate Support |
Consolidated Company |
||||||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 619 | $ | 595 | $ | 92 | $ | 63 | $ | 3,464 | $ | 3,164 | ||||||||||||||||||||
Noninterest income |
994 | (a) | 913 | (a | ) | 235 | 258 | 2,548 | (b) | 2,619 (b) | ||||||||||||||||||||||
Total net revenue |
1,613 | 1,508 | 327 | 321 | 6,012 (c) | 5,783 (c) | ||||||||||||||||||||||||||
Noninterest expense |
871 | 829 | 400 | 229 | 3,724 | 3,387 | ||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
742 | 679 | (73 | ) | 92 | 2,288 | 2,396 | |||||||||||||||||||||||||
Provision for credit losses |
221 | 91 | 69 | (189 | ) | 311 | (170 | ) | ||||||||||||||||||||||||
Income (loss) before income taxes |
521 | 588 | (142 | ) | 281 | 1,977 | 2,566 | |||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
130 | 147 | (87 | ) | 6 | 443 | 578 | |||||||||||||||||||||||||
Net income (loss) |
391 | 441 | (55 | ) | 275 | 1,534 | 1,988 | |||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | (3 | ) | (6 | ) | (3 | ) | (6 | ) | ||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 391 | $ | 441 | $ | (58 | ) | $ | 269 | $ | 1,531 | $ | 1,982 | |||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||
Loans |
$ | 33,854 | $ | 30,030 | $ | 3,668 | $ | 3,711 | $ | 324,187 | $ | 294,284 | ||||||||||||||||||||
Other earning assets |
1,023 | 5 | 204,560 | 193,798 | 212,574 | 206,467 | ||||||||||||||||||||||||||
Goodwill |
3,318 | 3,176 | — | — | 10,192 | 9,917 | ||||||||||||||||||||||||||
Other intangible assets |
438 | 518 | — | — | 4,376 | 3,435 | ||||||||||||||||||||||||||
Assets |
41,054 | 35,618 | 219,166 | 219,396 | 579,911 | 551,365 | ||||||||||||||||||||||||||
Noninterest-bearing deposits |
3,396 | 5,030 | 2,504 | 2,581 | 120,827 | 125,297 | ||||||||||||||||||||||||||
Interest-bearing deposits |
167 | 141 | 1,599 | 2,242 | 335,689 | 303,913 | ||||||||||||||||||||||||||
Total deposits |
3,563 | 5,171 | 4,103 | 4,823 | 456,516 | 429,210 | ||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
8,115 | 7,413 | 11,078 | 16,307 | 49,166 | 52,962 |
(a) |
Presented net of related rewards and rebate costs and certain partner payments of $772 million and $633 million for the three months ended June 30, 2022 and 2021, respectively. |
(b) |
Includes revenue generated from certain contracts with customers of $2.0 billion and $1.9 billion for the three months ended June 30, 2022 and 2021, respectively. |
(c) |
The Company, as a lessor, originates retail and commercial leases either directly to the consumer or indirectly through dealer networks. Under these arrangments, the Company recorded $188 million and $238 million of revenue for the three months ended June 30, 2022 and 2021, respectively, primarily consisting of interest income on sales-type and direct financing leases. |
U.S. Bancorp | 7 1 |
Corporate and Commercial Banking |
Consumer and Business Banking |
Wealth Management and Investment Services |
||||||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 1,523 | $ | 1,448 | $ | 3,129 | $ | 3,035 | $ | 627 | $ | 514 | ||||||||||||||||||||
Noninterest income |
517 | 533 | 856 | 1,203 | 1,248 | 1,080 | ||||||||||||||||||||||||||
Total net revenue |
2,040 | 1,981 | 3,985 | 4,238 | 1,875 | 1,594 | ||||||||||||||||||||||||||
Nointerest expense |
878 | 853 | 2,839 | 2,731 | 1,174 | 1,020 | ||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
1,162 | 1,128 | 1,146 | 1,507 | 701 | 574 | ||||||||||||||||||||||||||
Provision for credit losses |
104 | (46 | ) | (28 | ) | (108 | ) | 4 | 1 | |||||||||||||||||||||||
Income (loss) before income taxes |
1,058 | 1,174 | 1,174 | 1,615 | 697 | 573 | ||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
265 | 294 | 294 | 404 | 175 | 144 | ||||||||||||||||||||||||||
Net income (loss) |
793 | 880 | 880 | 1,211 | 522 | 429 | ||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 793 | $ | 880 | $ | 880 | $ | 1,211 | $ | 522 | $ | 429 | ||||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||
Loans |
$ | 119,557 | $ | 102,201 | $ | 140,984 | $ | 141,170 | $ | 21,521 | $ | 17,147 | ||||||||||||||||||||
Other earning assets |
4,416 | 4,364 | 3,475 | 9,092 | 255 | 258 | ||||||||||||||||||||||||||
Goodwill |
1,912 | 1,647 | 3,252 | 3,476 | 1,739 | 1,618 | ||||||||||||||||||||||||||
Other intangible assets |
4 | 5 | 3,406 | 2,661 | 283 | 63 | ||||||||||||||||||||||||||
Assets |
132,856 | 114,229 | 156,770 | 162,803 | 25,124 | 20,297 | ||||||||||||||||||||||||||
Noninterest-bearing deposits |
60,298 | 58,524 | 31,807 | 33,244 | 26,204 | 22,339 | ||||||||||||||||||||||||||
Interest-bearing deposits |
90,336 | 70,943 | 167,279 | 154,450 | 71,024 | 78,489 | ||||||||||||||||||||||||||
Total deposits |
150,634 | 129,467 | 199,086 | 187,694 | 97,228 | 100,828 | ||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
13,859 | 14,092 | 12,311 | 12,407 | 3,607 | 3,062 | ||||||||||||||||||||||||||
Payment Services |
Treasury and Corporate Support |
Consolidated Company |
||||||||||||||||||||||||||||||
(Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 1,241 | $ | 1,224 | $ | 144 | $ | 32 | $ | 6,664 | $ | 6,253 | ||||||||||||||||||||
Noninterest income |
1,852 (a) | 1,698 | (a | ) | 471 | 486 | 4,944 (b) | 5,000 (b) | ||||||||||||||||||||||||
Total net revenue |
3,093 | 2,922 | 615 | 518 | 11,608 (c) | 11,253 (c) | ||||||||||||||||||||||||||
Noninterest expense |
1,726 | 1,627 | 609 | 535 | 7,226 | 6,766 | ||||||||||||||||||||||||||
Income (loss) before provision and income taxes |
1,367 | 1,295 | 6 | (17 | ) | 4,382 | 4,487 | |||||||||||||||||||||||||
Provision for credit losses |
351 | 50 | (8 | ) | (894 | ) | 423 | (997 | ) | |||||||||||||||||||||||
Income (loss) before income taxes |
1,016 | 1,245 | 14 | 877 | 3,959 | 5,484 | ||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
254 | 311 | (121 | ) | 58 | 867 | 1,211 | |||||||||||||||||||||||||
Net income (loss) |
762 | 934 | 135 | 819 | 3,092 | 4,273 | ||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
— | — | (4 | ) | (11 | ) | (4 | ) | (11 | ) | ||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$ | 762 | $ | 934 | $ | 131 | $ | 808 | $ | 3,088 | $ | 4,262 | ||||||||||||||||||||
Average Balance Sheet |
||||||||||||||||||||||||||||||||
Loans |
$ | 32,802 | $ | 29,831 | $ | 3,744 | $ | 3,789 | $ | 318,608 | $ | 294,138 | ||||||||||||||||||||
Other earning assets |
1,023 | 5 | 205,541 | 191,382 | 214,710 | 205,101 | ||||||||||||||||||||||||||
Goodwill |
3,322 | 3,175 | — | — | 10,225 | 9,916 | ||||||||||||||||||||||||||
Other intangible assets |
450 | 530 | — | — | 4,143 | 3,259 | ||||||||||||||||||||||||||
Assets |
39,803 | 35,356 | 224,110 | 217,372 | 578,663 | 550,057 | ||||||||||||||||||||||||||
Noninterest-bearing deposits |
3,534 | 5,146 | 2,532 | 2,591 | 124,375 | 121,844 | ||||||||||||||||||||||||||
Interest-bearing deposits |
164 | 137 | 2,174 | 1,932 | 330,977 | 305,951 | ||||||||||||||||||||||||||
Total deposits |
3,698 | 5,283 | 4,706 | 4,523 | 455,352 | 427,795 | ||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
8,067 | 7,535 | 13,460 | 15,750 | 51,304 | 52,846 |
(a) |
Presented net of related rewards and rebate costs and certain partner payments of $1.4 billion and $1.2 billion for the six months ended June 30, 2022 and 2021, respectively. |
(b) |
Includes revenue generated from certain contracts with customers of $3.9 billion and $3.6 billion for the six months ended June 30, 2022 and 2021, respectively. |
(c) |
The Company, as a lessor, originates retail and commercial leases either directly to the consumer or indirectly through dealer networks. Under these arrangments, the Company recorded $392 million and $466 million of revenue for the six months ended June 30, 2022 and 2021, respectively, primarily consisting of interest income on sales-type and direct financing leases. |
7 2 |
U.S. Bancorp |
Note 18 |
Subsequent Events |
U.S. Bancorp | 7 3 |
For the Three Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in Millions) (Unaudited) | Average Balances |
Interest | Yields and Rates |
Average Balances |
Interest | Yields and Rates |
% Change Average Balances |
|||||||||||||||||||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities |
$ | 171,296 | $ | 825 | 1.93 | % | $ | 160,615 | $ | 635 | 1.58 | % | 6.7 | % | ||||||||||||||||||||||||||||||||||||||
Loans held for sale |
3,688 | 54 | 5.89 | 7,825 | 55 | 2.78 | (52.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Loans (b) |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial |
120,657 | 794 | 2.64 | 102,974 | 676 | 2.63 | 17.2 | |||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate |
39,517 | 330 | 3.35 | 38,564 | 306 | 3.18 | 2.5 | |||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages |
80,228 | 638 | 3.18 | 73,351 | 621 | 3.38 | 9.4 | |||||||||||||||||||||||||||||||||||||||||||||
Credit card |
22,748 | 589 | 10.38 | 21,116 | 554 | 10.54 | 7.7 | |||||||||||||||||||||||||||||||||||||||||||||
Other retail |
61,037 | 528 | 3.47 | 58,279 | 530 | 3.64 | 4.7 | |||||||||||||||||||||||||||||||||||||||||||||
Total loans |
324,187 | 2,879 | 3.56 | 294,284 | 2,687 | 3.66 | 10.2 | |||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits with banks |
31,116 | 57 | .74 | 31,358 | 6 | .08 | (.8 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Other earning assets |
6,474 | 39 | 2.36 | 6,669 | 26 | 1.61 | (2.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total earning assets |
536,761 | 3,854 | 2.88 | 500,751 | 3,409 | 2.73 | 7.2 | |||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
(5,710 | ) | (6,310 | ) | 9.5 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain (loss) on investment securities |
(9,226 | ) | 851 | * | ||||||||||||||||||||||||||||||||||||||||||||||||
Other assets |
58,086 | 56,073 | 3.6 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 579,911 | $ | 551,365 | 5.2 | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits |
$ | 120,827 | $ | 125,297 | (3.6 | )% | ||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest checking |
116,878 | 20 | .07 | 103,356 | 7 | .03 | 13.1 | |||||||||||||||||||||||||||||||||||||||||||||
Money market savings |
123,788 | 121 | .39 | 113,673 | 50 | .18 | 8.9 | |||||||||||||||||||||||||||||||||||||||||||||
Savings accounts |
68,127 | 2 | .01 | 62,102 | 1 | .01 | 9.7 | |||||||||||||||||||||||||||||||||||||||||||||
Time deposits |
26,896 | 34 | .51 | 24,782 | 24 | .39 | 8.5 | |||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing deposits |
335,689 | 177 | .21 | 303,913 | 82 | .11 | 10.5 | |||||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal funds purchased |
641 | 1 | .17 | 2,204 | — | .02 | (70.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Securities sold under agreements to repurchase |
2,078 | 2 | .10 | 1,658 | 1 | .03 | 25.3 | |||||||||||||||||||||||||||||||||||||||||||||
Commercial paper |
6,289 | 4 | .06 | 6,509 | — | — | (3.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Other short-term borrowings |
14,286 | 50 | .35 | 6,091 | 17 | .27 | * | |||||||||||||||||||||||||||||||||||||||||||||
Total short- term borrowings |
23,294 | 57 | .98 | 16,462 | 18 | .43 | 41.5 | |||||||||||||||||||||||||||||||||||||||||||||
Long-term debt |
31,390 | 156 | 1.99 | 36,190 | 145 | 1.61 | (13.3 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
390,373 | 390 | .40 | 356,565 | 245 | .28 | 9.5 | |||||||||||||||||||||||||||||||||||||||||||||
Other liabilities |
19,078 | 15,910 | 19.9 | |||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred equity |
6,808 | 5,968 | 14.1 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common equity |
42,358 | 46,994 | (9.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
49,166 | 52,962 | (7.2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests |
467 | 631 | (26.0 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total equity |
49,633 | 53,593 | (7.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and equity |
$ | 579,911 | $ | 551,365 | 5.2 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income |
$ | 3,464 | $ | 3,164 | ||||||||||||||||||||||||||||||||||||||||||||||||
Gross interest margin |
2.48 | % | 2.45 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Gross interest margin without taxable-equivalent increments |
2.46 | % | 2.43 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Percent of Earning Assets |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income |
2.88 | % | 2.73 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
.29 | .20 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin |
2.59 | % | 2.53 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin without taxable-equivalent increments |
2.57 |
% |
2.51 |
% |
* |
Not meaningful |
(a) |
Interest and rates are presented on a fully taxable-equivalent basis based on a federal income tax rate of 21 percent. |
(b) |
Interest income and rates on loans include loan fees. Nonaccrual loans are included in average loan balances. |
7 4 |
U.S. Bancorp |
For the Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in Millions) (Unaudited) | Average Balances |
Interest | Yields and Rates |
Average Balances |
Interest | Yields and Rates |
% Change Average Balances |
|||||||||||||||||||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities |
$ | 173,019 | $ | 1,561 | 1.80 | % | $ | 153,109 | $ | 1,169 | 1.53 | % | 13.0 | % | ||||||||||||||||||||||||||||||||||||||
Loans held for sale |
4,579 | 114 | 5.00 | 8,922 | 122 | 2.73 | (48.7 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Loans (b) |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial |
116,761 | 1,423 | 2.46 | 102,535 | 1,349 | 2.65 | 13.9 | |||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate |
39,302 | 625 | 3.21 | 38,675 | 611 | 3.18 | 1.6 | |||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages |
78,847 | 1,250 | 3.17 | 74,271 | 1,266 | 3.41 | 6.2 | |||||||||||||||||||||||||||||||||||||||||||||
Credit card |
22,297 | 1,151 | 10.41 | 21,130 | 1,132 | 10.81 | 5.5 | |||||||||||||||||||||||||||||||||||||||||||||
Other retail |
61,401 | 1,037 | 3.41 | 57,527 | 1,062 | 3.72 | 6.7 | |||||||||||||||||||||||||||||||||||||||||||||
Total loans |
318,608 | 5,486 | 3.47 | 294,138 | 5,420 | 3.71 | 8.3 | |||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits with banks |
30,487 | 71 | .47 | 36,542 | 15 | .08 | (16.6 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Other earning assets |
6,625 | 67 | 2.02 | 6,528 | 50 | 1.57 | 1.5 | |||||||||||||||||||||||||||||||||||||||||||||
Total earning assets |
533,318 | 7,299 | 2.75 | 499,239 | 6,776 | 2.73 | 6.8 | |||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
(5,706 | ) | (6,788 | ) | 15.9 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain (loss) on investment securities |
(5,907 | ) | 1,342 | * | ||||||||||||||||||||||||||||||||||||||||||||||||
Other assets |
56,958 | 56,264 | 1.2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 578,663 | $ | 550,057 | 5.2 | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits |
$ | 124,375 | $ | 121,844 | 2.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest checking |
115,975 | 29 | .05 | 100,387 | 13 | .03 | 15.5 | |||||||||||||||||||||||||||||||||||||||||||||
Money market savings |
121,700 | 173 | .29 | 119,218 | 100 | .17 | 2.1 | |||||||||||||||||||||||||||||||||||||||||||||
Savings accounts |
67,555 | 4 | .01 | 60,484 | 3 | .01 | 11.7 | |||||||||||||||||||||||||||||||||||||||||||||
Time deposits |
25,747 | 51 | .40 | 25,862 | 51 | .40 | (.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing deposits |
330,977 | 257 | .16 | 305,951 | 167 | .11 | 8.2 | |||||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal funds purchased |
937 | 1 | .16 | 1,840 | 1 | .04 | (49.1 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Securities sold under agreements to repurchase |
1,987 | 3 | .14 | 1,665 | 1 | .07 | 19.3 | |||||||||||||||||||||||||||||||||||||||||||||
Commercial paper |
6,381 | 4 | .06 | 6,328 | — | — | .8 | |||||||||||||||||||||||||||||||||||||||||||||
Other short-term borrowings |
11,873 | 70 | .59 | 4,961 | 32 | .65 | * | |||||||||||||||||||||||||||||||||||||||||||||
Total short- term borrowings |
21,178 | 78 | .75 | 14,794 | 34 | .47 | 43.2 | |||||||||||||||||||||||||||||||||||||||||||||
Long-term debt |
32,177 | 300 | 1.88 | 37,817 | 322 | 1.71 | (14.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
384,332 | 635 | .33 | 358,562 | 523 | .29 | 7.2 | |||||||||||||||||||||||||||||||||||||||||||||
Other liabilities |
18,184 | 16,174 | 12.4 | |||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred equity |
6,714 | 6,090 | 10.2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common equity |
44,590 | 46,756 | (4.6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
51,304 | 52,846 | (2.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests |
468 | 631 | (25.8 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total equity |
51,772 | 53,477 | (3.2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and equity |
$ | 578,663 | $ | 550,057 | 5.2 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income |
$ | 6,664 | $ | 6,253 | ||||||||||||||||||||||||||||||||||||||||||||||||
Gross interest margin |
2.42 | % | 2.44 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Gross interest margin without taxable-equivalent increments |
2.40 | % | 2.42 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Percent of Earning Assets |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income |
2.75 | % | 2.73 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
.24 | .21 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin |
2.51 | % | 2.52 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin without taxable-equivalent increments |
2.49 |
% |
2.50 |
% |
* |
Not meaningful |
(a) |
Interest and rates are presented on a fully taxable-equivalent basis based on a federal income tax rate of 21 percent. |
(b) |
Interest income and rates on loans include loan fees. Nonaccrual loans are included in average loan balances. |
U.S. Bancorp | 75 |
* | The schedules and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to provide a copy of the omitted schedules and similar attachments on a supplemental basis to the U.S. Securities and Exchange Commission or its staff, if requested. |
76 |
U.S. Bancorp |
U.S. BANCORP | ||||||
By: | /s/ L ISA R. STARK | |||||
| ||||||
Dated: August 4, 2022 | Lisa R. Stark Controller (Principal Accounting Officer and Duly Authorized Officer) |
U.S. Bancorp | 77 |
(1) | I have reviewed this Quarterly Report on Form 10-Q of U.S. Bancorp; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/ S / ANDREW CECERE |
Andrew Cecere |
Chief Executive Officer |
78 |
U.S. Bancorp |
(1) | I have reviewed this Quarterly Report on Form 10-Q of U.S. Bancorp; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/ S / TERRANCE R. DOLAN |
Terrance R. Dolan Chief Financial Officer |
U.S. Bancorp | 79 |
(1) | The Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/ S / ANDREW CECERE |
|
/ S / TERRANCE R. DOLAN | ||
Andrew Cecere Chief Executive Officer Dated: August 4, 2022 |
Terrance R. Dolan Chief Financial Officer |
80 |
U.S. Bancorp |
|
This report has been produced on recycled paper. |
Exhibit 2.1
EXECUTION COPY
AMENDMENT NO. 1
TO THE
SHARE PURCHASE AGREEMENT
[Certain identified information has been excluded from this document because it is both not material and is the type that the registrant treats as private or confidential.]
This Amendment No. 1, dated as of May 10, 2022 (this Amendment), to the Share Purchase Agreement, dated as of September 21, 2021 (as amended, modified or supplemented from time to time in accordance with its terms, the Purchase Agreement), by and among Mitsubishi UFJ Financial Group, Inc., a joint stock company (kabushiki kaisha) organized under the laws of Japan (Seller Holdco), MUFG Americas Holdings Corporation, a corporation organized under the laws of the state of Delaware and a wholly owned Subsidiary of Seller Holdco (Seller and, collectively with Seller Holdco, Sellers) and U.S. Bancorp, a corporation organized under the laws of Delaware (Purchaser).
RECITALS
WHEREAS, in accordance with Section 8.2 of the Purchase Agreement, the parties hereto wish to amend the Purchase Agreement as set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
2. Amendments. The parties acknowledge and agree that, effective on and as of the date hereof:
(a) Section 1.1 of the Purchase Agreement shall be amended by:
(i) inserting the following term in the appropriate alphabetical order:
Bridge Account Interface Agreement has the meaning set forth in Section 5.25.
Client Hedge Transactions has the meaning set forth in the Derivatives, Loans and Letters of Credit Agreement.
Derivatives, Loans and Letters of Credit Agreement has the meaning set forth in Section 5.22.
Excluded Commercial Card Business has the meaning set forth in the Excluded Commercial Card Business P&A Agreement.
Excluded Commercial Card Business P&A Agreement has the meaning set forth in Section 5.22.
Excluded Hedge Transactions has the meaning set forth in the Derivatives, Loans and Letters of Credit Agreement.
GCIB Deposits Agreement has the meaning set forth in Section 5.22.
GCIB Group A Deposits means deposit liabilities of depositors primarily related to, or used primarily in connection with, the Excluded Assets and Liabilities, including those customers as of December 31, 2021 as listed on Schedule 5 attached hereto (it being understood, that Parent Bank may update the list of customers as of December 31, 2021 included on Schedule 5 to reflect such customers on such date and in such manner as agreed to by the parties to the GCIB Deposits Agreement), subject to the treatment of Excluded Clients (as defined in the GCIB Deposits Agreement) in accordance with the GCIB Deposits Agreement.
GCIB Group C Deposits means deposit liabilities of such depositors of the GCIB business as listed on Schedule 5 attached hereto (it being understood, that Parent Bank may update the list of customers as of December 31, 2021 included on Schedule 5 to reflect such customers on such date and in such manner as agreed to by the parties to the GCIB Deposits Agreement), subject to the treatment of Excluded Clients (as defined in the GCIB Deposits Agreement) in accordance with the GCIB Deposits Agreement.
Stranded Loans has the meaning set forth in the Derivatives, Loans and Letters of Credit Agreement.
Stranded LOCs has the meaning set forth in the Derivatives, Loans and Letters of Credit Agreement.
Stranded Trades has the meaning set forth in the Derivatives, Loans and Letters of Credit Agreement.
Transferred FIG Portfolio means assets and liabilities associated with the products and services provided to correspondent bank clients of the Bank as set forth on Schedule 6 attached hereto.
Vendor Contracts Separation Framework has the meaning set forth in Section 5.28.
2
(ii) amending and restating each of the following definitions in its entirety as follows:
Excluded Customer means any customer that is (a) a private equity or other fund sponsor and its individual funds and portfolio companies or (b) a Japanese Corporate Customer and any Person that is directly or indirectly controlled by a Japanese Corporate Customer, provided that, in the case of (a), such private equity or other fund sponsor, and in the case of (b), such Japanese Corporate Customer, is identified on the list of Excluded Customers to be delivered by Sellers to Purchaser pursuant to Section 5.7(b).
P&A Agreement means the Amended and Restated Excluded Assets and Liabilities Purchase and Assumption Agreement, dated May 10, 2022 by and among the Bank, the Banks subsidiaries named therein, Seller and Seller Bank, as amended by Amendment No. 1 thereto and any further amendments thereto from time to time as mutually agreed by the parties thereto and Purchaser.
Transaction Documents means this Agreement, the P&A Agreement, the Transitional Services Agreement, the Reverse Transitional Services Agreement, the Registration Rights Agreement, the Derivatives, Loans and Letters of Credit Agreement, the Excluded Commercial Card Business P&A Agreement and the GCIB Deposits Agreement.
(b) ARTICLE 3 of the Purchase Agreement shall be amended by replacing the words (the Sellers Disclosure Schedule) in the lead-in paragraph in their entirety with (as amended by Amendment No. 1 thereto and any further amendments thereto from time to time as mutually agreed by the parties hereto, the Sellers Disclosure Schedule).
(c) Section 2.3 of the Purchase Agreement shall be amended by adding the following as a new clause (f):
Notwithstanding the treatment of the GCIB Group A Deposits as part of the Excluded Assets and Liabilities, the liabilities of the Bank associated with the GCIB Group A Deposits (and, for the avoidance of doubt, the liabilities associated with the GCIB Group C Deposits) (i) as of the Estimated Closing Balance Sheet Date, shall be liabilities of the Bank on the Estimated Closing Balance Sheet and the corresponding determinations of Estimated TBV and Estimated Purchase Price and (ii) as of the close of business on the day immediately preceding the Closing Date, shall be treated as liabilities of the Bank on the Closing Balance Sheet and the corresponding determinations of Closing TBV and Purchase Price.
3
(d) Section 2.3 of the Purchase Agreement shall be amended by adding the following as a new clause (g):
Notwithstanding the treatment of the Commercial Card Business as part of the Excluded Assets and Liabilities, the assets and liabilities of the Commercial Card Business (i) as of the Estimated Closing Balance Sheet Date, shall be assets and liabilities of the Bank on the Estimated Closing Balance Sheet and the corresponding determinations of Estimated TBV and Estimated Purchase Price and (ii) as of the close of business on the day immediately preceding the Closing Date, shall be treated as assets and liabilities of the Bank on the Closing Balance Sheet and the corresponding determinations of Closing TBV and Purchase Price. Seller shall cause the Bank to have, as of the Closing, in an amount of cash at least equal to the amount of the liabilities of the Bank associated with the Group A Deposits and Group C Deposits plus the Excess Capital Amount, if applicable, in accordance with Section 5.15.
(e) Section 3.7 of the Purchase Agreement shall be amended by:
(i) replacing the last sentence of Section 3.7(b) in its entirety with the following:
Sellers have made available to Purchaser a true, correct and complete copy of each Material Contract other than the Related Party Contracts; provided that the Related Party Contracts set forth in Section 5.12(a) of the Sellers Disclosure Schedule shall be scheduled or provided by Sellers pursuant to Section 5.12(a).
(ii) adding the following as a new clause (c):
All Related Party Contracts have been entered into on terms the Bank reasonably believes to be on arms-length. Except for those entered into in connection with the Transactions, all Related Party Contracts set forth in Section 5.12(a)(7) of the Sellers Disclosure Schedule have been entered into in the ordinary course of business of the Bank. All outstanding Intercompany Receivables or Intercompany Payables under the Contracts set forth in Section 5.12(a) of the Sellers Disclosure Schedule have been earned or incurred in the ordinary course of business of the Bank and in compliance with applicable Law and are recorded on the balance sheet of the Bank in accordance with GAAP, except as would not, individually or in the aggregate, reasonably be expected to be material to the Bank and the Transferred Subsidiaries, taken as a whole.
(f) Section 5.2(a) of the Purchase Agreement shall be amended and restated in its entirety as follows:
Except as (i) set forth in Section 5.2(a) of the Sellers Disclosure Schedule, (ii) is necessary and commercially reasonable in response to a Contagion Event or Contagion Event Measures, subject to Sellers providing Purchaser with advance notice and obtaining Purchasers prior written consent in respect of any such action (unless it is not reasonably practicable under the circumstances to provide such prior notice and
4
obtain prior consent, in which case Sellers shall provide notice to Purchaser as soon as reasonably practicable), or (iii) otherwise required or expressly contemplated by the Transaction Documents, from the date hereof until the earlier of the Closing Date or the termination of this Agreement, the Sellers shall cause the Bank and the Transferred Subsidiaries to (1) carry on their businesses in the ordinary course of business in all material respects; (2) use commercially reasonable efforts to preserve their present business organizations and relationships; and (3) use commercially reasonable efforts to preserve the rights, franchises, goodwill and relations of their customers, clients and others with whom business relationships exist; provided, that this Section 5.2(a) shall not apply to the Excluded Assets and Liabilities.
(g) Section 5.5 of the Purchase Agreement shall be amended by replacing two (2) years with seven (7) years and adding to the end of Section 5.5 the following:
Each of Sellers and Purchaser further agree that, for a period of seven (7) years following the Closing Date, if a Receiving Party has access to or receives Confidential Information of a Disclosing Party, it shall, and shall cause its Affiliates or their Representatives to, keep the Confidential Information as confidential and secret as its own similarly confidential documents and information, and shall employ such procedures (including employee trainings) as reasonably necessary to control the copying, accessing and distribution of any such Confidential Information.
(h) Section 5.10(g) of the Purchase Agreement shall be replaced in its entirety with the following:
Prior to the Effective Time, Sellers shall take any and all actions required to transfer the sponsorship of the Banks 401(k) Plan and the Banks 401(k) Plan Trust (together, the Bank 401(k) Plan) to Sellers or their Affiliates (other than the Bank and the Transferred Subsidiaries) effective immediately prior to and contingent upon the occurrence of the Effective Time. As soon as practicable following the Effective Time, Sellers and their Affiliates shall make its employer matching contribution to the Bank 401(k) Plan in respect of the Business Employees, pro-rated to reflect the portion of the plan year completed prior to the Closing. The Bank and the Purchaser shall take any and all actions as may be required, including amendments to the Bank 401(k) Plan and/or the tax-qualified defined contribution retirement plan designated by Purchaser (the Purchaser 401(k) Plan) to permit each Continuing Employee to make rollover contributions of eligible rollover distributions (within the meaning of Section 401(a)(31) of the Code, including of loans) in the form of cash, notes (in the case of loans) or a combination thereof, in an amount equal to the full account balance distributed or distributable to such Continuing Employee from the Bank 401(k) Plan to the Purchaser 401(k) Plan, as
5
promptly as reasonably practicable following the completion of the transition of such Continuing Employee onto the payroll of Purchaser (or an Affiliate of Purchaser that is a participating employer in the Purchaser 401(k) Plan). Each Continuing Employee shall become eligible to participate in the Purchaser 401(k) Plan as promptly as reasonably practicable following the completion of the transition of such Continuing Employee onto the payroll of Purchaser (or an Affiliate of Purchaser that is a participating employer in the Purchaser 401(k) Plan) (giving effect to the service crediting provisions of Section 5.10(b)).
(i) Section 5.10(f) of the Purchase Agreement shall be replaced in its entirety with the following:
Prior to the Effective Time, Sellers shall take all commercially reasonable actions necessary (i) to cause all Excluded Employees (and their eligible dependents) to cease participating in the Benefit Plans (other than the Bank 401(k) Plan) no later than immediately prior to the Effective Time, (ii) for all of the liabilities and obligations and, where applicable, assets (including pursuant to any related trusts, except as otherwise set forth in Section 5.10(f)(iv)) under the Benefit Plans set forth on Section 5.10(f)(ii) of the Sellers Disclosure Schedule, other than the liabilities and obligations and, where applicable, assets with respect to the Continuing Employees, to be assumed by employee benefit plans, programs and policies of Sellers or their Affiliates (other than the Bank and the Transferred Subsidiaries) no later than immediately prior to the Effective Time, such that, from and after the Effective Time, the Bank and the Transferred Subsidiaries and such Benefit Plans shall have no such liabilities or obligations other than those with respect to the Continuing Employees (and their eligible dependents), provided, that the portion of the assets that shall be assumed by Sellers or their Affiliates pursuant to this Section 5.10(f)(ii) shall be determined based on the proportion of the aggregate liabilities under the applicable Benefit Plan that is assumed by Sellers or their Affiliates or as otherwise required by law (including, without limitation, under Section 414(l) of the Code and Section 4044 of ERISA), provided, that, with respect to the MUFG Union Bank, N.A. Retirement Plan, (x) the liabilities, obligations and assets with respect to the Continuing Employees shall be transferred to a retirement plan and trust newly established at the Bank or a Transferred Subsidiary or Purchaser (at Purchasers election as communicated to Sellers prior to the transfer) (Continuing Employee Retirement Plan) and the liabilities, obligations and assets with respect to the Excluded Employees (and their eligible dependents) shall remain with the MUFG Union Bank, N.A. Retirement Plan, and (y) Sellers shall take any and all actions required to transfer the sponsorship of the MUFG Union Bank, N.A. Retirement Plan and the MUFG Union Bank, N.A. Retirement Plan Trust to Sellers or their Affiliates (other than the Bank and the Transferred Subsidiaries) effective immediately prior to and contingent upon the occurrence of the Effective
6
Time (unless the Sellers and Purchaser agree otherwise in good faith); provided, further, that, to the extent permitted by law (including, without limitation, under Section 414(l) of the Code and Section 4044 of ERISA) where the assets of the MUFG Union Bank, N.A. Retirement Plan are held in the form of non-cash securities and are required to be transferred to the Continuing Employee Retirement Plan, the securities shall be liquidated to cash and the proceeds, net of any reasonable transaction costs required to be incurred in the liquidation of such assets, shall be the maximum amount that may be transferred to the Continuing Employee Retirement Plan, (iii) to transfer the sponsorship of the Benefit Plans set forth on Section 5.10(f)(iii) of the Sellers Disclosure Schedule, and any associated trust, to the Bank or a Transferred Subsidiary, no later than immediately prior to the Effective Time; provided, that Seller (or its applicable Affiliates, other than the Bank and the Transferred Subsidiaries) shall assume or retain, as applicable, all liabilities and obligations for all workers compensation, short- and long-term disability, medical, prescription drug, dental, vision, life insurance, accidental death and dismemberment or other welfare benefit claims incurred by Excluded Employees prior to the Effective Time that are (and to the extent) covered under the terms of such Benefit Plan; provided, further, that for this purpose, a claim shall be deemed to be incurred (w) in the case of workers compensation and short- and long-term disability benefits (including related health benefits), at the time of the injury, sickness or other event giving rise to the claim for such benefits, (x) in the case of medical, prescription drug, dental or vision benefits, at the time that professional services, equipment or prescription drugs covered by such Benefit Plan are obtained, (y) in the case of life insurance benefits, upon death, and (z) in the case of accidental death and dismemberment, at the time of the accident, and notwithstanding the foregoing, in the case of a hospital stay or similar confinement that begins prior to the Effective Time and ends on or after the Effective Time, Seller (or its applicable Affiliate, other than the Bank and the Transferred Subsidiaries) shall be responsible for the cost of all professional services, equipment, and prescription drugs provided during such hospital stay or similar confinement in accordance with the terms and conditions of such Benefit Plan, and (iv) to transfer the sponsorship of the Benefit Plans set forth on Section 5.10(f)(iv) of the Sellers Disclosure Schedule to Sellers or their Affiliates (other than the Bank and the Transferred Subsidiaries) no later than immediately prior to the Effective Time.
(j) Section 5.11(b) of the Purchase Agreement shall be amended by inserting the following sentence at the end of the provision:
Purchaser shall cause the Bank to change its legal name to remove any reference to MUFG or any Seller Marks by the earlier of (x) the Bank Merger (it being understood that the legal name of the Bank will be changed by operation of the Bank Merger and the Bank Merger will occur in connection with the conversion of the Banks systems to the Purchasers systems) and (y) the one (1) year anniversary of the Closing Date.
7
(k) Section 5.11 of the Purchase Agreement shall be amended by adding the following as a new clause (i):
In the event Sellers or their Affiliates provide or make available any Excluded Data to the Purchaser or its Affiliates in connection with the Transactions, then the Sellers acknowledge and agree that Purchaser and its Affiliates shall be deemed authorized recipients thereof, and shall not be required to notify Sellers of such receipt. For purposes of this Section 5.11(i), Excluded Data means any Personal Information or Confidential Information relating to the Sellers or their Affiliates (other than the Bank and the Transferred Subsidiaries) or their past, current or potential customers, employees, directors and contractors or the Excluded Assets and Liabilities, whether on its own or combined, commingled or aggregated with data (including Personal Information or Confidential Information) relating to the Bank and the Transferred Subsidiaries.
(l) Section 5.12 of the Purchase Agreement shall be amended and restated in its entirety as follows:
Section 5.12 Intercompany Items. Except as set forth in Section 5.12 of the Sellers Disclosure Schedule, prior to the Closing, Sellers shall take, or cause to be taken, all such actions necessary so that (a) all Related Party Contracts are terminated (except for any Transaction Document and any other agreement (mutually agreed in form among the parties hereto) to effectuate the actions contemplated by any Transaction Document, including (i) the delivery of services under the Transitional Services Agreement or Reverse Transitional Services Agreement, (ii) the Client Hedge Transactions and Excluded Hedge Transactions and (iii) any other Related Party Contracts contemplated to be entered into by any Transaction Document by the parties thereto), and (b) all outstanding Intercompany Receivables or Intercompany Payables shall have been settled or paid (other than those under Related Party Contracts that are not required to be terminated prior to the Closing pursuant to clause (a)); provided that the parties hereby agree to work in good faith to agree upon mutually acceptable procedures for the settlement or payment of (i) such amounts in a tax-efficient manner and (ii) any trailing activities. Without limiting Purchasers rights under Section 5.1(a), at least thirty (30) days prior to the Closing, Sellers shall (A) deliver to Purchaser a schedule of key transaction terms of each Related Party Contract set forth in Section 5.12(a)(6) of the Sellers Disclosure Schedule, and (B) make available to Purchaser a true, correct and complete copy of each material Related Party Contract as set forth in Section 5.12(a)(7) of the Sellers Disclosure Schedule (other than material Related Party Contracts as set forth in Subitem a and b thereof, which are executed substantially in the form of
8
the standard form agreements provided by Sellers to Purchaser prior to May 10, 2022). After the Closing, (1) Purchaser and Sellers shall cooperate prior to the renewal of any Contract set forth on Section 5.12 of the Sellers Disclosure Schedule, and at the reasonable request of Purchaser, Sellers shall take such actions required to terminate any such Contracts prior to the applicable renewal period, including by sending nonrenewal notices to any Third Party to any Contract set forth on Section 5.12(a)(7) of the Sellers Disclosure Schedule in accordance with the terms of such Contract, and (2) upon the reasonable request of Purchaser, Sellers shall cooperate with Purchaser to amend the terms of, or terminate, any Contract set forth on Section 5.12 of the Sellers Disclosure Schedule that has not been entered into in the ordinary course of the business of the Bank and on arms length terms, including, with respect to any Contract set forth on Section 5.12(a)(7) of the Sellers Disclosure Schedule, by entering to bilateral arrangements between the Bank and Seller (or its applicable Affiliate) so that the economic terms under such Contract as between the Bank and Seller (or its applicable Affiliate) reflect arms length terms.
(m) Section 5.14(a) of the Purchase Agreement shall be amended and restated in its entirety as follows:
(a) Pursuant to the terms and conditions contained in the P&A Agreement, Sellers shall cause Bank and the Transferred Subsidiaries to transfer to Sellers and their Affiliates (other than the Bank or the Transferred Subsidiaries), as designated by the Sellers, and Sellers shall, or cause their Affiliates to, purchase and assume the assets and liabilities described in Schedule 4 attached hereto, as may be amended from time to time as mutually agreed by the parties hereto (such assets and liabilities, collectively, the Excluded Assets and Liabilities and such transfer or transfers, together with such other transactions described in the Excluded Assets and Liabilities Purchase and Assumption Agreement, the Excluded Assets and Liabilities Transfer). Subject to Section 2.7 hereof, the Excluded Assets and Liabilities Transfer shall be completed prior to the Closing; provided that (i) the Excluded Commercial Card Business shall be transferred by the Bank to Seller Bank after the Closing pursuant to the Excluded Commercial Card Business Purchase and Assumption Agreement, on the terms and subject to the conditions thereof; (ii) the GCIB Group A Deposits shall be transferred by the Bank to Seller Bank prior to or after the Closing pursuant to the GCIB Deposit Agreement, on the terms and subject to the conditions thereof; and (iii) the Stranded Trades, Stranded Loans and Stranded LOCs shall be transferred by the Bank to Seller Bank prior to or after the Closing pursuant to the Derivatives, Loans and Letters of Credit Agreement, on the terms and subject to the conditions thereof.
9
(n) Section 5.22 of the Purchase Agreement shall be amended and restated in its entirety as follows:
On the Closing Date, Purchaser (or the Purchaser Bank) and Sellers shall cause to be executed and delivered (i) a Transitional Services Agreement, substantially in the form attached hereto as Annex B (the Transitional Services Agreement), (ii) a Reverse Transitional Services Agreement, substantially in the form attached hereto as Annex C (the Reverse Transitional Services Agreement), and (iii) a Registration Rights Agreement, substantially in the form attached hereto as Annex D (the Registration Rights Agreement), in each case with any changes or modifications thereto mutually agreed by Sellers and Purchaser. On or as promptly as practicable following May 10, 2022, Bank and Seller Bank shall enter into an Excluded Commercial Card Business P&A Agreement, substantially in the form attached hereto as Annex E and as mutually agreed by the parties hereto (the Excluded Commercial Card Business P&A Agreement), with any changes or modifications thereto mutually agreed by Sellers and Purchaser; for the avoidance of doubt, the parties hereto agree that any assets and liabilities related to accounts that are reclassified as Transferred Accounts (as defined in the Excluded Commercial Card Business P&A Agreement) pursuant to Section 3.2(b) of the Excluded Commercial Card Business P&A Agreement shall no longer be considered Excluded Assets and Liabilities from and after the date of such reclassification. On or as promptly as practicable following May 10, 2022, the Sellers, Seller Bank, the Bank and Purchaser shall enter into a GCIB Deposits Agreement, substantially in the form attached hereto as Annex F and as mutually agreed by the parties hereto (the GCIB Deposits Agreement), with any changes or modifications thereto mutually agreed by Sellers and Purchaser; for the avoidance of doubt, the parties hereto agree that any assets or liabilities related to Reclassified Group C Accounts (as defined in the GCIB Deposits Agreement) pursuant to Section 2.1 of the GCIB Deposits Agreement shall no longer be considered Excluded Assets and Liabilities from and after the date of such reclassification. On or as promptly as practicable following May 10, 2022, the Sellers, Seller Bank, the Bank and Purchaser shall enter into an Derivatives, Loans and Letters of Credit Agreement, substantially in the form attached hereto as Annex G and as mutually agreed by the parties hereto (including the Master Risk Participation Agreement, between the Bank and Seller Bank attached as Annex A thereto, the LOC Participation Agreement between the Bank and Seller Bank attached as Annex B thereto, and the Loan Participation Agreement between the Bank and Seller Bank attached as Annex C thereto, the Derivatives, Loans and Letters of Credit Agreement), with any changes or modifications thereto mutually agreed by Sellers and Purchaser; for the avoidance of doubt, the parties hereto agree that any assets or liabilities related to the Stranded Trades, Stranded Loans and Stranded LOCs are part of the Excluded Assets and Liabilities.
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(o) Section 5.24 of the Purchase Agreement shall be amended by adding the following as a new clause (d):
For the avoidance of doubt, the Carveout Financial Statements made available to Purchaser on or after May 10, 2022 will reflect the updated scope of the Transactions. The balance sheet for the Bank and the Transferred Subsidiaries as of December 31, 2021 contained in such Carveout Financial Statements will not include any Excluded Assets and Liabilities, other than the GCIB Group A Deposits and the Excluded Commercial Card Business, and will reflect all assets and liabilities of the Bank and the Transferred Subsidiaries (after giving effect to the Excluded Assets and Liabilities Transfer, other than the GCIB Group A Deposits and the Excluded Commercial Card Business) required to be set forth on such balance sheet, including the GCIB Group A Deposits, the GCIB Group C Deposits and the Excluded Commercial Card Business.
(p) Section 5.25 of the Purchase Agreement shall be amended and restated in its entirety as follows:
Sellers and Purchaser agree that, following the date hereof, they will make good faith efforts towards executing and delivering, as of the Closing, Contracts that would implement the proposed business relationships, including (1) financial service arrangements for Japanese corporate and individual clients to provide services that are similar to such services as provided by Sellers and the Bank prior to Closing, including the Bridge Account Interface Agreement, to be entered into by and between the Bank and Seller Bank prior to Closing, substantially in the form attached hereto as Annex H (the Bridge Account Interface Agreement); (2) collaboration in transaction banking services; (3) collaboration in financial technology business; and (4) other areas as mutually agreed to by the parties, in each case, on mutually acceptable terms taking into account each partys risk appetite and expected economic returns.
(q) ARTICLE 5 of the Purchase Agreement shall be further amended by inserting the following Section 5.28 at the end thereof:
The Sellers and the Purchaser hereby agree to the vendor contracts separation framework attached hereto as Annex I (as may be updated from time to time by mutual agreement of the Sellers and Purchaser, the Vendor Contracts Separation Framework) and to implement the terms thereunder in good faith.
11
(r) ARTICLE 5 of the Purchase Agreement shall be further amended by inserting the following Section 5.29 at the end thereof:
The Sellers and the Purchaser hereby agree to the cost cap framework attached hereto as Annex J (as may be updated from time to time by mutual agreement of the Sellers and Purchaser, the Cost Cap Framework) and to implement the terms thereunder in good faith. Sellers and Purchaser acknowledge and agree that services provided under the Transitional Services Agreement and Reverse Transitional Services Agreement shall be subject to the Cost Cap Framework.
(s) Section 6.1(c) of the Purchase Agreement shall be amended and restated in its entirety as follows:
(c) Excluded Assets and Liabilities Transfer. Subject to Section 2.7 hereof, the Excluded Assets and Liabilities Transfer shall have been consummated, except with respect to the Excluded Commercial Card Business (subject to the Excluded Commercial Card Business P&A Agreement), Stranded Trades, Stranded Loans and Stranded LOCs (subject to the Derivatives, Loans and Letters of Credit Agreement), and the GCIB Group A Deposits (subject to the GCIB Deposits Agreement);
(t) Schedule 4 of the Purchase Agreement shall be amended and restated in its entirety to read as the Schedule 4 set forth in Exhibit A hereto and, accordingly, each reference to Schedule 4 in the Purchase Agreement shall be deemed a reference to Schedule 4 set forth in Exhibit A hereto.
(u) The schedule as set forth in Exhibit B hereto shall be added to the Purchase Agreement as the Schedule 5 attached thereto.
(v) The schedule as set forth in Exhibit C hereto shall be added to the Purchase Agreement as the Schedule 6 attached thereto.
(w) The Sellers Disclosure Schedule shall be amended by the Amendment No. 1 to the Sellers Disclosure Schedule, dated as of the date hereof, as set forth in Exhibit D hereto (the Disclosure Schedule Amendment) and, accordingly, each reference to the Sellers Disclosure Schedule in the Purchase Agreement shall be deemed a reference to the Sellers Disclosure Schedule, as amended by the Disclosure Schedule Amendment.
(x) The form of Excluded Commercial Card Business P&A Agreement as set forth in Exhibit E hereto shall be added to the Purchase Agreement as the Annex E attached thereto.
(y) The form of GCIB Deposits Agreement as set forth in Exhibit F hereto shall be added to the Purchase Agreement as the Annex F attached thereto.
(z) The form of Derivatives, Loans and Letter of Credit Agreement as set forth in Exhibit G hereto shall be added to the Purchase Agreement as the Annex G attached thereto.
12
(aa) The form of Bridge Account Interface Agreement as set forth in Exhibit H hereto shall be added to the Purchase Agreement as the Annex H attached thereto.
(bb) The Vendor Contracts Separation Framework as set forth in Exhibit I hereto shall be added to the Purchase Agreement as the Annex I attached thereto.
(cc) The Cost Cap Framework as set forth in Exhibit J hereto shall be added to the Purchase Agreement as the Annex J attached thereto.
3. No Other Amendments to Purchase Agreement.
(a) On and after the date hereof, each reference in the Purchase Agreement to this Agreement, hereto, herein, hereof, hereunder or words of similar import referring to the Purchase Agreement shall mean and be a reference to the Purchase Agreement as amended hereby.
(b) Except as otherwise expressly provided herein, all of the terms and conditions of the Purchase Agreement remain unchanged and continue in full force and effect.
4. Miscellaneous. The provisions of Sections 8.2 8.13 (inclusive) of the Purchase Agreement are incorporated into, and shall apply to, this Amendment, mutatis mutandis.
[Signature page follows]
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IN WITNESS WHEREOF, this Amendment No. 1 has been executed on behalf of each of the parties hereto as of the date first above written.
MITSUBISHI UFJ FINANCIAL GROUP, INC. | ||
By: | /s/ Takayoshi Futae | |
Name: Takayoshi Futae | ||
Title: Managing Executive Officer | ||
MUFG AMERICAS HOLDINGS CORPORATION | ||
By: | /s/ Kevin Cronin | |
Name: Kevin Cronin | ||
Title: President & CEO | ||
U.S. BANCORP | ||
By: | /s/ Andrew Cecere | |
Name: Andrew Cecere | ||
Title: Chairman, President and Chief Executive Officer |
[Signature Page to Amendment No. 1 to the Purchase Agreement]
[EXHIBITS]
[Information omitted]
CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, Andrew Cecere, certify that:
(1) | I have reviewed this Quarterly Report on Form 10-Q of U.S. Bancorp; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(5) | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/S/ ANDREW CECERE |
Andrew Cecere |
Chief Executive Officer |
Dated: August 4, 2022
EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, Terrance R. Dolan, certify that:
(1) | I have reviewed this Quarterly Report on Form 10-Q of U.S. Bancorp; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(5) | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/S/ TERRANCE R. DOLAN |
Terrance R. Dolan Chief Financial Officer |
Dated: August 4, 2022
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Chief Executive Officer and Chief Financial Officer of U.S. Bancorp, a Delaware corporation (the Company), do hereby certify that:
(1) | The Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the Form 10-Q) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ ANDREW CECERE |
|
/S/ TERRANCE R. DOLAN | ||
Andrew Cecere Chief Executive Officer
Dated: August 4, 2022 |
Terrance R. Dolan Chief Financial Officer |