US BANCORP \DE\ Quarterly Report for Q2 Ended Jun 30, 2021

Summary

U.S. Bancorp (USB) reported strong financial performance for the second quarter and the first half of 2021, demonstrating a significant rebound from the prior year's pandemic-impacted results. Net income attributable to U.S. Bancorp surged to $1.98 billion ($1.28 per diluted share) for Q2 2021, a substantial increase from $689 million ($0.41 per diluted share) in Q2 2020. For the first six months of 2021, net income reached $4.26 billion ($2.73 per diluted share), more than double the $1.86 billion ($1.12 per diluted share) reported for the same period in 2020. The company's return on average assets and return on average common equity also showed marked improvement, reflecting the improved earnings. Total net revenue saw a slight decrease of 0.9% for the quarter and 3.1% for the year-to-date period compared to the prior year, primarily due to lower net interest income driven by a lower interest rate environment and declining loan balances. However, noninterest income saw a modest increase in the quarter, driven by payment services and deposit fees, though it declined year-to-date. Noninterest expense increased by 2.1% for the quarter and 2.0% year-to-date, largely due to higher compensation and technology expenses, reflecting investments and improved financial results. A key driver of the improved profitability was the significant reduction in the provision for credit losses. For Q2 2021, the company recorded a benefit of $170 million, a stark contrast to the $1.74 billion provision in Q2 2020, due to improved credit quality and economic conditions. This trend continued for the first six months, with a benefit of $997 million compared to a provision of $2.73 billion in the prior year. Net charge-offs also decreased substantially year-over-year. The bank's capital ratios remained strong and well above regulatory requirements.

Key Highlights

• 1Net income attributable to U.S. Bancorp increased significantly to $1.98 billion in Q2 2021, up from $689 million in Q2 2020.
• 2Diluted earnings per share rose to $1.28 in Q2 2021, compared to $0.41 in the prior year's second quarter.
• 3The provision for credit losses reversed to a benefit of $170 million in Q2 2021, a substantial improvement from a $1.74 billion provision in Q2 2020, reflecting improved credit quality.
• 4Total net revenue experienced a slight decline of 0.9% year-over-year for the quarter, primarily due to lower net interest income from a lower rate environment.
• 5Noninterest expense increased by 2.1% for the quarter, driven by higher compensation and technology spending.
• 6Return on average assets improved to 1.44% in Q2 2021 from 0.51% in Q2 2020.
• 7Return on average common equity increased to 16.3% in Q2 2021 from 5.3% in Q2 2020.
• 8Common equity tier 1 capital ratio remained strong at 9.9%.

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