Exhibit 99.1

 

		U.S. Bancorp Reports First Quarter 2021 Results   • Net revenue of $5.5 billion and net income of $2.3 billion • Return on average assets of 1.69% and return on average common equity of 19.0% • Common Equity Tier 1 capital ratio of 9.9% and strong levels of liquidity
1Q21 Key Financial Data		1Q21 Highlights

PROFITABILITY METRICS			1Q21				4Q20				1Q20					•  Net income of $2,280 million and diluted earnings per common share of $1.45   •  Return on average assets of 1.69% and return on average common equity of 19.0%   •  Net revenue of $5,470 million, including $3,089 million of net interest income and $2,381 million of noninterest income   •  Average total earning assets growth of 11.2% year-over-year   •  Average total deposits growth of 17.5% year-over-year   •  Net charge-off ratio of 0.31% in 1Q21 compared with 0.58% in 4Q20 and 0.53% in the 1Q20   •  Allowance for credit losses declined $1,050 million during the quarter given improving economic outlook and credit trends   •  Nonperforming assets decreased 7.4% on a linked quarter basis and increased 27.1% year-over year   •  CET1 capital ratio increased to 9.9% at March 31, 2021, compared with 9.7% at December 31, 2020
Return on average assets (%)			1.69				1.10				.95
Return on average common equity (%)			19.0				12.1				9.7
Return on tangible common  equity (%) (a)			24.3				15.6				12.6
Net interest margin (%)			2.50				2.57				2.91
Efficiency ratio (%) (a)			62.1				58.8				58.0
INCOME STATEMENT (b)			1Q21				4Q20				1Q20
Net interest income (taxable-equivalent basis)			$3,089				$3,201				$3,247
Noninterest income			$2,381				$2,550				$2,525
Net income attributable to U.S. Bancorp			$2,280				$1,519				$1,171
Diluted earnings per common share			$1.45				$.95				$.72
Dividends declared per common share			$.42				$.42				$.42
BALANCE SHEET (b)			1Q21				4Q20				1Q20
Average total loans			$293,989				$302,308				$297,657
Average total deposits			$426,364				$422,413				$362,804
Net charge-off ratio			.31%				.58%				.53%
Book value per common share (period end)			$30.53				$31.26				$30.24
Basel III standardized CET1 (c)			9.9%				9.7%				9.0%
(a) See Non-GAAP Financial Measures reconciliation on page 16
(b) Dollars in millions, except per share data
(c) CET1 = Common equity tier 1 capital ratio

CEO Commentary

“A lot has changed in the last year, and our first quarter results were reflective of improving economic conditions and increasing consumer confidence and spending activity. Credit quality continues to perform better than we had expected – in fact, we incurred the bank’s lowest net charge-off ratio in recent decades – and an improved outlook for future performance allowed us to release over a billion dollars in reserves for credit losses. Our payments businesses are well-positioned to take advantage of the cyclical recovery and renewed business and consumer activity. In a similar fashion, we will continue to invest in capabilities to create growth, as evidenced by our advances in digital, our alliance with State Farm and our acquisition of talech, an important small business payments capability. These investments will drive revenue growth and further efficiencies that will create value for our business, customers and shareholders. Although the pandemic has disrupted most aspects of personal and professional life for more than a year, our employees have dedicated themselves to service and our company’s success. I appreciate their hard work and everything they continue to do to position us for better days ahead.”

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

 

 

 

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

		U.S. Bancorp First Quarter 2021 Results

 

INCOME STATEMENT HIGHLIGHTS
($ in millions, except per-share data)														Percent Change
		1Q  2021				4Q  2020				1Q  2020				1Q21 vs  4Q20				1Q21 vs  1Q20
Net interest income			$3,063				$3,175				$3,223				(3.5)				(5.0)
Taxable-equivalent adjustment			26				26				24				--				8.3
Net interest income (taxable-equivalent basis)			3,089				3,201				3,247				(3.5)				(4.9)
Noninterest income			2,381				2,550				2,525				(6.6)				(5.7)
Total net revenue			5,470				5,751				5,772				(4.9)				(5.2)
Noninterest expense			3,379				3,364				3,316				.4				1.9
Income before provision and income taxes			2,091				2,387				2,456				(12.4)				(14.9)
Provision for credit losses			(827)				441				993				nm				nm
Income before taxes			2,918				1,946				1,463				49.9				99.5
Income taxes and taxable-equivalent adjustment			633				421				284				50.4				nm
Net income			2,285				1,525				1,179				49.8				93.8
Net (income) loss attributable to noncontrolling interests			(5)				(6)				(8)				16.7				37.5
Net income attributable to U.S. Bancorp			$2,280				$1,519				$1,171				50.1				94.7
Net income applicable to U.S. Bancorp common shareholders			$2,175				$1,425				$1,088				52.6				99.9
Diluted earnings per common share			$1.45				$.95				$.72				52.6				nm

Net income attributable to U.S. Bancorp was $2,280 million for the first quarter of 2021, which was 94.7 percent higher than the $1,171 million for the first quarter of 2020, and 50.1 percent higher than the $1,519 million for the fourth quarter of 2020. Diluted earnings per common share were $1.45 in the first quarter of 2021, compared with $0.72 in the first quarter of 2020 and $0.95 in the fourth quarter of 2020.

The increase in net income year-over-year was primarily due to lower provision for credit losses, partially offset by lower net interest income and noninterest income in addition to higher noninterest expense. Net interest income decreased 4.9 percent on a year-over-year tax-equivalent basis, primarily due to the impact of lower rates compared with a year ago and higher premium amortization in the investment portfolio related to mortgage refinancing activities, partially offset by the benefit of deposit and funding mix as well as higher loan fees related to the Small Business Administration (“SBA”) Paycheck Protection Program. Net interest margin declined from a year ago to 2.50 percent in the first quarter of 2021 primarily due to the impact of a lower yield curve on earning assets, higher levels of liquidity and higher premium amortization within the investment portfolio, partially offset by the net benefit of deposit repricing and funding composition and higher loan fees. Noninterest income decreased 5.7 percent compared with a year ago, driven by lower mortgage banking revenue, deposit service charges, securities gains and other noninterest income, partially offset by improvement in trust and investment management fees and commercial products revenue. Noninterest expense increased 1.9 percent reflecting increases in personnel expense, primarily related to performance-based incentive compensation, as well as technology and communications expense, partially offset by lower net occupancy and equipment expense, marketing and business development expense, and other noninterest expense.

Net income increased on a linked quarter basis primarily due to lower provision for credit losses, partially offset by lower net interest income and noninterest income. Net interest income decreased 3.5 percent primarily due to lower average loan balances, the yield impact of prepayments, and two less days in the quarter, partially offset by the benefit of deposit and funding mix as well as higher loan fees. The net interest margin decreased on a linked quarter basis primarily reflecting the dilutive impact of investment portfolio reinvestment rates, premium amortization and mortgage prepayments, partially offset by lower cash balances. Noninterest income decreased 6.6 percent compared with the fourth quarter of 2020 driven by a decline in mortgage banking revenue, credit and debit card revenue, and other noninterest income, partially offset by higher commercial product revenue. Noninterest expense was relatively flat, reflecting higher personnel expense related to incentive compensation and the seasonal impact of payroll taxes, partially offset by lower professional services expense, marketing and business development expense and other noninterest expense.

 

 

        2

		U.S. Bancorp First Quarter 2021 Results

 

NET INTEREST INCOME
(Taxable-equivalent basis; $ in millions)														Change
		1Q 2021				4Q 2020				1Q 2020				1Q21 vs 4Q20				1Q21 vs 1Q20
Components of net interest income
Income on earning assets			$3,367				$3,505				$4,142				$(138)				$(775)
Expense on interest-bearing liabilities			278				304				895				(26)				(617)
Net interest income			$3,089				$3,201				$3,247				$(112)				$(158)
Average yields and rates paid
Earning assets yield			2.73%				2.81%				3.71%				(.08)%				(.98)%
Rate paid on interest-bearing liabilities			.31				.33				1.02				(.02)				(.71)
Gross interest margin			2.42%				2.48%				2.69%				(.06)%				(.27)%
Net interest margin			2.50%				2.57%				2.91%				(.07)%				(.41)%
Average balances
Investment securities (a)			$145,520				$133,430				$120,843				$12,090				$24,677
Loans			293,989				302,308				297,657				(8,319)				(3,668)
Earning assets			497,711				497,437				447,722				274				49,989
Interest-bearing liabilities			360,582				362,445				352,761				(1,863)				7,821

(a) Excludes unrealized gain (loss)

 

 

 

Net interest income on a taxable-equivalent basis in the first quarter of 2021 was $3,089 million, a decrease of $158 million (4.9 percent) compared with the first quarter of 2020. The decrease was primarily due to the impact of lower rates compared with a year ago and higher premium amortization related to securities prepayments, partially offset by the benefit of deposit and funding mix as well as higher loan fees. Average earning assets were $50.0 billion (11.2 percent) higher than the first quarter of 2020, reflecting increases of $24.7 billion (20.4 percent) in average investment securities and $23.7 billion (96.8 percent) in average other earning assets, including cash balances being maintained for liquidity given the current economic environment, while average total loans decreased $3.7 billion (1.2 percent) due to continued paydowns by corporate customers that accessed the capital markets last year.

Net interest income on a taxable-equivalent basis decreased $112 million (3.5 percent) on a linked quarter basis primarily due to a decline in average loan balances, the yield impact of prepayments on mortgage loans and securities and two less days in the quarter, partially offset by the benefit of deposit and funding mix as well as higher loan fees. Average earning assets were flat on a linked quarter basis, reflecting increases of $12.1 billion (9.1 percent) in average investment securities, partially offset by a decrease of $8.3 billion (2.8 percent) in average total loans, primarily due to continued paydowns by corporate customers, as well as a decrease of $4.7 billion (8.8 percent) in average other earning assets driven by lower cash balances on a linked quarter basis.

Net interest margin in the first quarter of 2021 was 2.50 percent, compared with 2.91 percent in the first quarter of 2020 and 2.57 percent in the fourth quarter of 2020. The decrease in the net interest margin from the prior year was primarily due to the impact of a lower yield curve on earning assets, higher premium amortization within the investment portfolio and decisions to maintain higher levels of liquidity, partially offset by the net benefit of deposit repricing and funding composition and higher loan fees. The decrease in net interest margin on a linked quarter basis reflects the dilutive impact of investment portfolio reinvestment rates, premium amortization and mortgage prepayments, partially offset by lower cash balances.

Given the current interest rates, we believe the first quarter will be the low point for net interest income with opportunity for growth in future quarters.

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

 

 

        3

		U.S. Bancorp First Quarter 2021 Results

 

AVERAGE LOANS
($ in millions)														Percent Change
		1Q 2021				4Q 2020				1Q 2020				1Q21 vs 4Q20				1Q21 vs 1Q20
Commercial			$96,757				$100,863				$100,329				(4.1	)			(3.6	)
Lease financing			5,334				5,558				5,658				(4.0	)			(5.7	)
Total commercial			102,091				106,421				105,987				(4.1	)			(3.7	)
Commercial mortgages			27,968				29,004				29,523				(3.6	)			(5.3	)
Construction and development			10,818				11,094				10,555				(2.5	)			2.5
Total commercial real estate			38,786				40,098				40,078				(3.3	)			(3.2	)
Residential mortgages			75,201				76,809				70,892				(2.1	)			6.1
Credit card			21,144				21,937				23,836				(3.6	)			(11.3	)
Retail leasing			7,975				8,299				8,474				(3.9	)			(5.9	)
Home equity and second mortgages			12,062				12,816				14,838				(5.9	)			(18.7	)
Other			36,730				35,928				33,552				2.2				9.5
Total other retail			56,767				57,043				56,864				(.5	)			(.2	)
Total loans			$293,989				$302,308				$297,657				(2.8	)			(1.2	)

 

 

 

Average total loans for the first quarter of 2021 were $3.7 billion (1.2 percent) lower than the first quarter of 2020. The decrease was primarily due to lower total commercial loans (3.7 percent) driven by continued paydowns by corporate customers that accessed the capital markets last year, lower credit card loans (11.3 percent) driven by higher customer payment rates given their excess liquidity from the government stimulus, and lower home equity and second mortgages (18.7 percent) as more customers chose to refinance their existing first lien residential mortgage balances during the prior year due to the low interest rate environment. These decreases were partially offset by growth in residential mortgages (6.1 percent) driven by loan repurchases from the Government National Mortgage Association (“GNMA”), as well as growth in other retail loans (9.5 percent) driven by growth in installment loans due to the impact of COVID-19 on recreational vehicle sales.

Average total loans were $8.3 billion (2.8 percent) lower than the fourth quarter of 2020 primarily driven by lower total commercial loans (4.1 percent), lower residential mortgages (2.1 percent), and lower home equity and second mortgages (5.9 percent), all as a result of customer paydowns.

 

 

        4

		U.S. Bancorp First Quarter 2021 Results

 

AVERAGE DEPOSITS
($ in millions)														Percent Change
		1Q  2021				4Q  2020				1Q  2020				1Q21 vs 4Q20				1Q21 vs 1Q20
Noninterest-bearing deposits		$	118,352			$	115,148			$	74,142				2.8				59.6
Interest-bearing savings deposits
Interest checking			97,385				91,384				77,359				6.6				25.9
Money market savings			124,825				127,390				121,946				(2.0	)			2.4
Savings accounts			58,848				55,730				48,048				5.6				22.5
Total savings deposits			281,058				274,504				247,353				2.4				13.6
Time deposits			26,954				32,761				41,309				(17.7	)			(34.8)
Total interest-bearing deposits			308,012				307,265				288,662				.2				6.7
Total deposits		$	426,364			$	422,413			$	362,804				.9				17.5

 

 

Average total deposits for the first quarter of 2021 were $63.6 billion (17.5 percent) higher than the first quarter of 2020, including approximately $10 billion related to the acquisition of deposit balances from State Farm Bank in the fourth quarter of 2020. Average noninterest-bearing deposits increased $44.2 billion (59.6 percent) across all business lines. Average total savings deposits were $33.7 billion (13.6 percent) higher year-over-year driven by Consumer and Business Banking and Wealth Management and Investment Services. Average time deposits were $14.4 billion (34.8 percent) lower than the prior year quarter primarily within Corporate and Commercial Banking. Changes in time deposits are largely related to those deposits managed as an alternative to other funding sources, based largely on relative pricing and liquidity characteristics.

Average total deposits increased $4.0 billion (0.9 percent) from the fourth quarter of 2020. On a linked quarter basis, average noninterest-bearing deposits increased $3.2 billion (2.8 percent) driven by Corporate and Commercial Banking and Wealth Management and Investment Services. Average total savings deposits increased $6.6 billion (2.4 percent) compared with the fourth quarter of 2020 primarily due to increases in Consumer and Business Banking and Wealth Management and Investment Services. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, decreased $5.8 billion (17.7 percent) on a linked quarter basis across all business lines.

The growth in average noninterest-bearing deposits and total average savings deposits year-over-year was primarily a result of the actions by the federal government to increase liquidity in the financial system, customers maintaining balance sheet liquidity by utilizing existing credit facilities and government stimulus programs.

 

 

        5

		U.S. Bancorp First Quarter 2021 Results

 

NONINTEREST INCOME
($ in millions)														Percent Change
		1Q 2021				4Q 2020				1Q 2020				1Q21 vs 4Q20				1Q21 vs 1Q20
Credit and debit card revenue			$336				$362				$304				(7.2	)			10.5
Corporate payment products revenue			126				126				145				--				(13.1	)
Merchant processing services			318				311				337				2.3				(5.6	)
Trust and investment management fees			444				441				427				.7				4.0
Deposit service charges			161				165				209				(2.4	)			(23.0	)
Treasury management fees			147				143				143				2.8				2.8
Commercial products revenue			280				239				246				17.2				13.8
Mortgage banking revenue			299				468				395				(36.1	)			(24.3	)
Investment products fees			55				50				49				10.0				12.2
Securities gains (losses), net			25				34				50				(26.5	)			(50.0	)
Other			190				211				220				(10.0	)			(13.6	)
Total noninterest income			$2,381				$2,550				$2,525				(6.6	)			(5.7	)

 

 

First quarter noninterest income of $2,381 million was $144 million (5.7 percent) lower than the first quarter of 2020 primarily reflecting lower mortgage banking revenue, including a $145 million reduction in the fair value of mortgage servicing rights, net of hedging activities driven by the impact of prepayments on the servicing portfolio partially offset by higher production volume and related gain on sale margins compared with a year ago. During the past year, payment services revenue has been adversely affected by the impact of the pandemic on consumer spending, particularly related to travel and entertainment activities. However, consumer spending continues to strengthen across most sectors driven by government stimulus, local jurisdictions reducing restrictions and consumer behaviors normalizing. As a result, payments revenues are essentially flat compared with the first quarter of 2020. The components of payments revenue included higher credit and debit card revenue of $32 million (10.5 percent) driven by higher net interchange revenue related to sales volumes and higher prepaid fees as a result of government stimulus programs, more than offset by lower corporate payment products revenue of $19 million (13.1 percent) primarily due to lower business spending related to travel and entertainment and lower merchant processing services revenue of $19 million (5.6 percent) driven by lower sales volume and merchant fees. Deposit service charges decreased $48 million (23.0 percent) primarily due to lower consumer spending activities and higher consumer deposit levels related to government stimulus. Other noninterest income decreased $30 million (13.6 percent) primarily due to lower gains on sale of certain businesses and tax-advantaged investment syndication revenue in the first quarter of 2021, partially offset by higher retail leasing end of term residual gains. Partially offsetting the unfavorable impact of these fee categories, trust and investment management fees increased $17 million (4.0 percent) driven by business growth and favorable market conditions, while commercial products revenue increased $34 million (13.8 percent) primarily due to better market conditions and higher non-yield loan fees on unused commitments.

Noninterest income was $169 million (6.6 percent) lower in the first quarter of 2021 compared with the fourth quarter of 2020, reflecting lower mortgage banking revenue, payment services revenue and other noninterest income, partially offset by higher commercial product revenue. Mortgage banking revenue decreased $169 million (36.1 percent) due to the unfavorable net impact of the change in fair value of mortgage servicing rights, net of hedging activities, and lower production volume and related gain on sale margins. Payment services revenue decreased $19 million (2.4 percent) compared with the fourth quarter of 2020 primarily driven by lower credit and debit card revenue of $26 million (7.2 percent) due to seasonally lower sales volume and lower prepaid fees related to the timing of government stimulus. Other noninterest income decreased $21 million (10.0 percent) primarily due to lower tax-advantaged investment syndication revenue, partially offset by a gain on sale of a business. These decreases were partially offset by higher commercial products revenue of $41 million (17.2 percent) primarily due to higher corporate bond fees and trading revenue.

 

 

        6

		U.S. Bancorp First Quarter 2021 Results

 

NONINTEREST EXPENSE
($ in millions)														Percent Change
		1Q 2021				4Q 2020				1Q 2020				1Q21 vs 4Q20				1Q21 vs 1Q20
Compensation		$	1,803			$	1,643			$	1,620				9.7				11.3
Employee benefits			384				302				352				27.2				9.1
Net occupancy and equipment			263				269				276				(2.2	)			(4.7	)
Professional services			98				123				99				(20.3	)			(1.0	)
Marketing and business development			48				105				74				(54.3	)			(35.1	)
Technology and communications			359				362				289				(.8	)			24.2
Postage, printing and supplies			69				74				72				(6.8	)			(4.2	)
Other intangibles			38				47				42				(19.1	)			(9.5	)
Other			317				439				492				(27.8	)			(35.6	)
Total noninterest expense		$	3,379			$	3,364			$	3,316				.4				1.9

First quarter noninterest expense of $3,379 million was $63 million (1.9 percent) higher than the first quarter of 2020 reflecting increases in compensation expense, employee benefits expense, and technology and communications expense, partially offset by lower net occupancy and equipment expense, marketing and business development expense, and other noninterest expense. Compensation expense increased $183 million (11.3 percent) compared with the first quarter of 2020 due to merit, revenue-related compensation driven by business production in mortgage banking, performance-based incentives, and stock-based compensation. Employee benefits expense increased $32 million (9.1 percent) primarily due to payroll taxes and related benefits, as well as higher medical claims expense compared with the first quarter of 2020. Technology and communications expense increased $70 million (24.2 percent) primarily due to higher call center volume related to prepaid cards and capital expenditures supporting business technology investments. These increases were partially offset by lower net occupancy and equipment expense of $13 million (4.7 percent) primarily due to branch optimization initiatives and lower marketing and business development expense of $26 million (35.1 percent) due to a reduction in travel as a result of COVID-19. In addition, other noninterest expense decreased $175 million (35.6 percent) primarily due to higher COVID-19 related accruals in the first quarter of 2020 including recognizing liabilities related to future delivery exposures related to merchant and airline processing.

Noninterest expense increased $15 million (0.4 percent) on a linked quarter basis reflecting higher compensation and employee benefits expense, mostly offset by lower professional services expense, marketing and business development expense and other noninterest expense. Compensation expense increased $160 million (9.7 percent) primarily due to higher performance-based incentives and seasonally higher stock-based compensation as well as seasonally higher employee benefits of $82 million (27.2 percent) related to payroll taxes and medical claims expense. Partially offsetting these increases, professional services expense decreased $25 million (20.3 percent) and marketing and business development expense decreased $57 million (54.3 percent) primarily due to a seasonal reduction in spending. Other noninterest expense decreased $122 million (27.8 percent) due to higher COVID-19 related accruals in the fourth quarter of 2020, including liabilities related to future delivery exposures associated with merchant and airline processing as well as lower costs related to tax-advantaged projects in the first quarter of 2021.

Provision for Income Taxes

The provision for income taxes for the first quarter of 2021 resulted in a tax rate of 21.7 percent on a taxable-equivalent basis (effective tax rate of 21.0 percent), compared with 19.4 percent on a taxable-equivalent basis (effective tax rate of 18.1 percent) in the first quarter of 2020, and a tax rate of 21.6 percent on a taxable-equivalent basis (effective tax rate of 20.6 percent) in the fourth quarter of 2020. The increase in the tax rate, on a taxable-equivalent basis, is due to the marginal impact of providing taxes on higher pretax earnings in the first quarter of 2021.

 

 

        7

		U.S. Bancorp First Quarter 2021 Results

 

 

ALLOWANCE FOR CREDIT LOSSES
($ in millions)		1Q 2021				% (a)				4Q 2020				% (a)				3Q 2020				% (a)				2Q 2020				% (a)				1Q 2020				% (a)
Balance, beginning of period		$	8,010							$	8,010							$	7,890							$	6,590							$	4,491
Change in accounting principle (b)			--								--								--								--								1,499
Net charge-offs
Commercial			52				.22				142				.56				167				.60				105				.34				69				.28
Lease financing			4				.30				8				.57				11				.78				6				.43				5				.36
Total commercial			56				.22				150				.56				178				.61				111				.35				74				.28
Commercial mortgages			(12	)			(.17	)			82				1.12				85				1.13				19				.25				(1	)			(.01	)
Construction and development			5				.19				2				.07				(2	)			(.07	)			3				.11				(1	)			(.04	)
Total commercial real estate			(7	)			(.07	)			84				.83				83				.81				22				.22				(2	)			(.02	)
Residential mortgages			(5	)			(.03	)			(7	)			(.04	)			(3	)			(.02	)			(3	)			(.02	)			1				.01
Credit card			144				2.76				165				2.99				201				3.63				229				4.28				234				3.95
Retail leasing			1				.05				9				.43				20				.94				33				1.58				19				.90
Home equity and second mortgages			(2	)			(.07	)			(3	)			(.09	)			(2	)			(.06	)			--				--				1				.03
Other			36				.40				43				.48				38				.43				45				.54				66				.79
Total other retail			35				.25				49				.34				56				.39				78				.56				86				.61
Total net charge-offs			223				.31				441				.58				515				.66				437				.55				393				.53
Provision for credit losses			(827	)							441								635								1,737								993
Balance, end of period		$	6,960							$	8,010							$	8,010							$	7,890							$	6,590
Components
Allowance for loan losses		$	6,343							$	7,314							$	7,407							$	7,383							$	6,216
Liability for unfunded credit commitments			617								696								603								507								374
Total allowance for credit losses		$	6,960							$	8,010							$	8,010							$	7,890							$	6,590
Gross charge-offs		$	374							$	556							$	611							$	522							$	491
Gross recoveries		$	151							$	115							$	96							$	85							$	98
Allowance for credit losses as a percentage of Period-end loans			2.36								2.69								2.61								2.54								2.07
Nonperforming loans			617								654								678								737								809
Nonperforming assets			579								617								631								673								697
(a)  Annualized and calculated on average loan balances
(b)  Effective January 1, 2020, the Company adopted accounting guidance which changed impairment recognition of financial instruments to a model that is based on expected losses rather than incurred losses

 

 

        8

		U.S. Bancorp First Quarter 2021 Results

 

The Company’s provision for credit losses for the first quarter of 2021 was a benefit of $827 million, which was $1,268 million lower than the prior quarter and $1,820 million lower than the first quarter of 2020. During the first quarter of 2021, factors affecting economic conditions, including passing of additional government stimulus, widespread vaccine availability in the U.S. and reduced levels of new virus cases, have shifted to a clear improving trend not present in the fourth quarter of 2020 or a year ago. In addition to these factors, expected loss estimates considered various factors including customer specific information impacting changes in risk ratings, projected delinquencies and the impact of industry-wide loan modification efforts designed to limit long term effects of the pandemic. Currently, consumer credit trends continue to perform better than expected, although select commercial portfolios continue to be monitored for structural shifts associated with the pandemic.

Total net charge-offs in the first quarter of 2021 were $223 million, compared with $441 million in the fourth quarter of 2020, and $393 million in the first quarter of 2020. The net charge-off ratio was 0.31 percent in the first quarter of 2021, compared with 0.58 percent in the fourth quarter of 2020 and 0.53 percent in the first quarter of 2020. Net charge-offs decreased $218 million (49.4 percent) compared with the fourth quarter of 2020 mainly due to lower total commercial and total commercial real estate net charge-offs. Net charge-offs decreased $170 million (43.3 percent) compared with the first quarter of 2020 primarily due to lower total commercial, credit card and total other retail net charge-offs.

Nonperforming assets were $1,202 million at March 31, 2021, compared with $1,298 million at December 31, 2020, and $946 million at March 31, 2020. The ratio of nonperforming assets to loans and other real estate was 0.41 percent at March 31, 2021, compared with 0.44 percent at December 31, 2020, and 0.30 percent at March 31, 2020. The year-over-year increase in nonperforming assets was primarily due to increases in total commercial and total commercial real estate nonperforming loans. Accruing loans 90 days or more past due were $476 million at March 31, 2021, compared with $477 million at December 31, 2020, and $579 million at March 31, 2020. The Company expects credit quality to return to more normalized levels throughout the remainder of the year as the economy rebounds and consumer spending resumes. However, some manageable levels of elevated nonperforming assets in certain industries and loan categories yet to recover from pandemic related impacts are expected.

The allowance for credit losses was $6,960 million at March 31, 2021, compared with $8,010 million at December 31, 2020, and $6,590 million at March 31, 2020. The decrease on a linked quarter basis was driven by improvement in the global economy combined with government stimulus programs and vaccine availability compared with the reserve build during 2020 driven by the concerns associated with the economic impact of COVID-19. The ratio of the allowance for credit losses to period-end loans was 2.36 percent at March 31, 2021, compared with 2.69 percent at December 31, 2020, and 2.07 percent at March 31, 2020. The ratio of the allowance for credit losses to nonperforming loans was 617 percent at March 31, 2021, compared with 654 percent at December 31, 2020, and 809 percent at March 31, 2020.

 

 

        9

		U.S. Bancorp First Quarter 2021 Results

 

 

DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES
(Percent)		Mar 31 2021				Dec 31 2020				Sep 30 2020				Jun 30 2020				Mar 31 2020
Delinquent loan ratios - 90 days or more past due excluding nonperforming loans
Commercial			.06				.05				.06				.07				.06
Commercial real estate			.01				.01				--				--				--
Residential mortgages			.19				.18				.15				.16				.15
Credit card			.95				.88				.91				1.22				1.29
Other retail			.12				.15				.14				.16				.17
Total loans			.16				.16				.15				.18				.18
Delinquent loan ratios - 90 days or more past due including nonperforming loans
Commercial			.39				.42				.48				.45				.31
Commercial real estate			.94				1.15				.82				.48				.25
Residential mortgages			.54				.50				.46				.50				.49
Credit card			.95				.88				.91				1.22				1.29
Other retail			.42				.42				.40				.48				.45
Total loans			.54				.57				.53				.52				.44

 

ASSET QUALITY (a)
($ in millions)
		Mar 31 2021				Dec 31 2020				Sep 30 2020				Jun 30 2020				Mar 31 2020
Nonperforming loans
Commercial			$298				$321				$403				$403				$276
Lease financing			49				54				56				53				33
Total commercial			347				375				459				456				309
Commercial mortgages			266				411				323				188				89
Construction and development			90				39				7				7				12
Total commercial real estate			356				450				330				195				101
Residential mortgages			253				245				240				242				243
Credit card			--				--				--				--				--
Other retail			172				154				152				178				162
Total nonperforming loans			1,128				1,224				1,181				1,071				815
Other real estate			19				24				35				52				70
Other nonperforming assets			55				50				54				50				61
Total nonperforming assets			$1,202				$1,298				$1,270				$1,173				$946
Accruing loans 90 days or more past due			$476				$477				$461				$556				$579
Nonperforming assets to loans plus ORE (%)			.41				.44				.41				.38				.30
(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due

 

 

        10

		U.S. Bancorp First Quarter 2021 Results

 

COMMON SHARES
(Millions)		1Q				4Q				3Q				2Q				1Q
		2021				2020				2020				2020				2020
Beginning shares outstanding			1,507				1,506				1,506				1,506				1,534
Shares issued for stock incentive plans, acquisitions and other corporate purposes			3				1				--				--				3
Shares repurchased			(13	)			--				--				--				(31	)
Ending shares outstanding			1,497				1,507				1,506				1,506				1,506

 

CAPITAL POSITION
($ in millions)		Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
		2021				2020				2020				2020				2020
Total U.S. Bancorp shareholders’ equity		$	51,678			$	53,095			$	52,565			$	51,850			$	51,532
Basel III Standardized Approach (a)
Common equity tier 1 capital		$	39,103			$	38,045			$	37,485			$	36,351			$	36,224
Tier 1 capital			45,517				44,474				43,916				42,781				42,651
Total risk-based capital			53,625				52,602				52,086				51,457				51,277
Common equity tier 1 capital ratio			9.9	%			9.7	%			9.4	%			9.0	%			9.0	%
Tier 1 capital ratio			11.5				11.3				11.0				10.6				10.5
Total risk-based capital ratio			13.5				13.4				13.1				12.8				12.7
Leverage ratio			8.4				8.3				8.3				8.0				8.8
Tangible common equity to tangible assets (b)			6.6				6.9				7.0				6.7				6.7
Tangible common equity to risk-weighted assets (b)			9.1				9.5				9.3				9.0				8.9
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)			9.5				9.3				9.0				8.7				8.6
(a) Amounts and ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology
(b) See Non-GAAP Financial Measures reconciliation on page 16

 

 

Total U.S. Bancorp shareholders’ equity was $51.7 billion at March 31, 2021, compared with $53.1 billion at December 31, 2020, and $51.5 billion at March 31, 2020. Beginning in March of 2020 and continuing through the remainder of 2020, the Company suspended all common stock repurchases except for those done exclusively in connection with its stock-based compensation programs. This action was initially taken to maintain strong capital levels given the impact and uncertainties of COVID-19 on the economy and global markets. Due to continued economic uncertainty, the Federal Reserve Board implemented measures beginning in the fourth quarter of 2020 and extending through the first quarter of 2021, restricting capital distributions of all large bank holding companies, including U.S. Bancorp. These restrictions include capping common stock dividends at existing rates and limiting the aggregate amount of common stock dividends and share repurchases to an amount not exceeding the average net income of the four preceding calendar quarters. Based on the results of the December 2020 Federal Reserve Stress Test, the Company announced its Board of Directors had approved an authorization to repurchase up to $3.0 billion of its common stock beginning January 1, 2021.

All regulatory ratios continue to be in excess of “well-capitalized” requirements. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III standardized approach was 9.9 percent at March 31, 2021, compared with 9.7 percent at December 31, 2020, and 9.0 percent at March 31, 2020. The Company’s common equity tier 1 capital to risk-weighted assets ratio, reflecting the full implementation of the current expected credit losses methodology was 9.5 percent at March 31, 2021, compared with 9.3 percent at December 31, 2020, and 8.6 percent at March 31, 2020.

 

 

        11

		U.S. Bancorp First Quarter 2021 Results

 

 

Investor Conference Call

On Thursday, April 15, 2021, at 10 a.m. CT, Chairman, President and Chief Executive Officer Andy Cecere and Vice Chair and Chief Financial Officer Terry Dolan will host a conference call to review the financial results. The conference call will be available online or by telephone. To access the webcast and presentation, visit U.S. Bancorp’s website at usbank.com and click on “About Us,” “Investor Relations” and “Webcasts & Presentations.” To access the conference call from locations within the United States and Canada, please dial 866.316.1409. Participants calling from outside the United States and Canada, please dial 706.634.9086. The conference ID number for all participants is 2351343. For those unable to participate during the live call, a recording will be available at approximately 1 p.m. CT on Thursday, April 15 and will be accessible until Thursday, April 22 at 10:59 p.m. CT. To access the recorded message within the United States and Canada, please dial 855.859.2056. If calling from outside the United States and Canada, please dial 404.537.3406 to access the recording. The conference ID is 2351343.

 

 

About U.S. Bancorp

U.S. Bancorp, with nearly 70,000 employees and $553 billion in assets as of March 31, 2021, is the parent company of U.S. Bank National Association, the fifth-largest commercial bank in the United States. The Minneapolis-based bank blends its relationship teams, branches and ATM network with digital tools that allow customers to bank when, where and how they prefer. U.S. Bank is committed to serving its millions of retail, business, wealth management, payment, commercial, corporate, and investment customers across the country and around the world as a trusted and responsible financial partner. This commitment continues to earn a spot on the Ethisphere Institute’s World’s Most Ethical Companies list and puts U.S. Bank in the top 5% of global companies assessed on the CDP A List for climate change action. Visit usbank.com for more.

 

 

Forward-looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. The COVID-19 pandemic is adversely affecting U.S. Bancorp, its customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities, reduce the availability of funding to certain financial institutions, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by changes in interest rates; further increases in unemployment rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; civil unrest; changes in customer behavior and preferences; breaches in data security; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk.

For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2020, on file with the Securities and Exchange Commission, including the sections entitled “Corporate Risk Profile” and “Risk Factors” contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. In addition, factors other than these risks also could adversely affect U.S. Bancorp’s results, and the reader should not consider these risks to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

 

 

        12

		U.S. Bancorp First Quarter 2021 Results

 

 

Non-GAAP Financial Measures

 

In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:

 

•

Tangible common equity to tangible assets

•

Tangible common equity to risk-weighted assets

•

Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology, and

•

Return on tangible common equity.

These capital measures are viewed by management as useful additional methods of evaluating the Company’s utilization of its capital held and the level of capital available to withstand unexpected negative market or economic conditions. Additionally, presentation of these measures allows investors, analysts and banking regulators to assess the Company’s capital position relative to other financial services companies. These capital measures are not defined in generally accepted accounting principles (“GAAP”), or are not currently effective or defined in banking regulations. In addition, certain of these measures differ from currently effective capital ratios defined by banking regulations principally in that the currently effective ratios, which are subject to certain transitional provisions, temporarily exclude the impact of the 2020 adoption of accounting guidance related to impairment of financial instruments based on the current expected credit losses methodology. As a result, these capital measures disclosed by the Company may be considered non-GAAP financial measures. Management believes this information helps investors assess trends in the Company’s capital adequacy.

The Company also discloses net interest income and related ratios and analysis on a taxable-equivalent basis, which may also be considered non-GAAP financial measures. The Company believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis.

There may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider the consolidated financial statements and other financial information contained in this press release in their entirety, and not to rely on any single financial measure. A table follows that shows the Company’s calculation of these non-GAAP financial measures.

 

 

        13

		U.S. Bancorp First Quarter 2021 Results

 

CONSOLIDATED STATEMENT OF INCOME
		Three Months Ended
(Dollars and Shares in Millions, Except Per Share Data)		March 31,
(Unaudited)		2021				2020
Interest Income
Loans			$2,724				$3,311
Loans held for sale			67				44
Investment securities			517				692
Other interest income			33				69
Total interest income			3,341				4,116
Interest Expense
Deposits			85				525
Short-term borrowings			16				71
Long-term debt			177				297
Total interest expense			278				893
Net interest income			3,063				3,223
Provision for credit losses			(827	)			993
Net interest income after provision for credit losses			3,890				2,230
Noninterest Income
Credit and debit card revenue			336				304
Corporate payment products revenue			126				145
Merchant processing services			318				337
Trust and investment management fees			444				427
Deposit service charges			161				209
Treasury management fees			147				143
Commercial products revenue			280				246
Mortgage banking revenue			299				395
Investment products fees			55				49
Securities gains (losses), net			25				50
Other			190				220
Total noninterest income			2,381				2,525
Noninterest Expense
Compensation			1,803				1,620
Employee benefits			384				352
Net occupancy and equipment			263				276
Professional services			98				99
Marketing and business development			48				74
Technology and communications			359				289
Postage, printing and supplies			69				72
Other intangibles			38				42
Other			317				492
Total noninterest expense			3,379				3,316
Income before income taxes			2,892				1,439
Applicable income taxes			607				260
Net income			2,285				1,179
Net (income) loss attributable to noncontrolling interests			(5	)			(8	)
Net income attributable to U.S. Bancorp			$2,280				$1,171
Net income applicable to U.S. Bancorp common shareholders			$2,175				$1,088
Earnings per common share			$1.45				$.72
Diluted earnings per common share			$1.45				$.72
Dividends declared per common share			$.42				$.42
Average common shares outstanding			1,502				1,518
Average diluted common shares outstanding			1,503				1,519

 

 

        14

 

CONSOLIDATED ENDING BALANCE SHEET
(Dollars in Millions)		March 31, 2021				December 31, 2020				March 31, 2020
Assets			(Unaudited)								(Unaudited)
Cash and due from banks			$43,501				$62,580				$46,805
Available-for-sale investment securities			156,003				136,840				123,681
Loans held for sale			8,991				8,761				4,623
Loans
Commercial			104,158				102,871				126,317
Commercial real estate			38,432				39,311				40,980
Residential mortgages			73,624				76,155				71,175
Credit card			20,872				22,346				22,781
Other retail			57,341				57,024				57,052
Total loans			294,427				297,707				318,305
Less allowance for loan losses			(6,343	)			(7,314	)			(6,216	)
Net loans			288,084				290,393				312,089
Premises and equipment			3,388				3,468				3,660
Goodwill			9,905				9,918				9,836
Other intangible assets			3,462				2,864				2,629
Other assets			40,041				39,081				39,586
Total assets			$553,375				$553,905				$542,909
Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing			126,754				$118,089				$91,432
Interest-bearing			307,007				311,681				303,422
Total deposits			433,761				429,770				394,854
Short-term borrowings			12,098				11,766				26,344
Long-term debt			37,419				41,297				52,298
Other liabilities			17,789				17,347				17,251
Total liabilities			501,067				500,180				490,747
Shareholders’ equity
Preferred stock			5,968				5,983				5,984
Common stock			21				21				21
Capital surplus			8,487				8,511				8,452
Retained earnings			65,740				64,188				62,544
Less treasury stock			(26,443	)			(25,930	)			(25,972	)
Accumulated other comprehensive income (loss)			(2,095	)			322				503
Total U.S. Bancorp shareholders’ equity			51,678				53,095				51,532
Noncontrolling interests			630				630				630
Total equity			52,308				53,725				52,162
Total liabilities and equity			$553,375				$553,905				$542,909

 

 

        15