Within the Company, financial performance is measured by major lines of business based on the products and services provided to customers through its distribution channels. These operating segments are components of the Company about which financial information is prepared and is evaluated regularly by management in deciding how to allocate resources and assess performance. The Company has five reportable operating segments:

Corporate and Commercial Banking

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

non-profit

and public sector clients.

Consumer and Business Banking

Consumer and Business Banking delivers products and services through banking offices, telephone servicing and sales,

on-line

services, direct mail, ATM processing and mobile devices. It encompasses community banking, metropolitan banking and indirect lending, as well as mortgage banking.

Wealth Management and Investment Services

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

Payment Services

Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services, consumer lines of credit and merchant processing.

Treasury and Corporate Support

Treasury and Corporate Support includes the Company’s investment portfolios, funding, capital management, interest rate risk management, income taxes not allocated to business segments, including most investments in

tax-advantaged

projects, and the residual aggregate of those expenses associated with corporate activities that are managed on a consolidated basis.

Basis of Presentation

Business segment results are derived from the Company’s business unit profitability reporting systems by specifically attributing managed balance sheet assets, deposits and other liabilities and their related income or expense. The allowance for credit losses and related provision expense are allocated to the business segments according to the volume and credit quality of the loan balances managed, but with the impact of changes in economic forecasts recorded in Treasury and Corporate Support. Goodwill and other intangible assets are assigned to the business segments based on the mix of business of an entity acquired by the Company. Within the Company, capital levels are evaluated and managed centrally; however, capital is allocated to the business segments to support evaluation of business performance. Business segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. Generally, the determination of the amount of capital allocated to each business segment includes credit allocations following a Basel III regulatory framework. Interest income and expense is determined based on the assets and liabilities managed by the business segment. Because funding and asset liability management is a central function, funds transfer-pricing methodologies are utilized to allocate a cost of funds used or credit for funds provided to all business segment assets and liabilities, respectively, using a matched funding concept. Also, each business unit is allocated the taxable-equivalent benefit of

tax-exempt

products. The residual effect on net interest income of asset/liability management activities is included in Treasury and Corporate Support. Noninterest income and expenses directly managed by each business segment, including fees, service charges, salaries and benefits, and other direct revenues and costs are accounted for within each segment’s financial results in a manner similar to the consolidated financial statements. Occupancy costs are allocated based on utilization of facilities by the business segments. Generally, operating losses are charged to the business segment when the loss event is realized in a manner similar to a loan

charge-off.

Noninterest expenses incurred by centrally managed operations or business segments that

directly support another business segment’s operations are charged to the applicable business segment based on its utilization of those services, primarily measured by the volume of customer activities, number of employees or other relevant factors. These allocated expenses are reported as net shared services expense within noninterest expense. Certain activities that do not directly support the operations of the business segments or for which the business segments are not considered financially accountable in evaluating their performance are not charged to the business segments. The income or expenses associated with these corporate activities is reported within the Treasury and Corporate Support business segment. Income taxes are assessed to each business segment at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Treasury and Corporate Support.

Designations, assignments and allocations change from time to time as management systems are enhanced, methods of evaluating performance or product lines change or business segments are realigned to better respond to the Company’s diverse customer base. During 2020, certain organization and methodology changes were made and, accordingly, 2019 results were restated and presented on a comparable basis.

Business segment results for the three months ended June 30 were as follows:


	Corporate and Commercial Banking						Consumer and Business Banking						Wealth Management and Investment Services
(Dollars in Millions)	2020			2019			2020			2019			2020			2019
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	890		$	774		$	1,486		$	1,597		$	256		$	305
Noninterest income		340			244			921			567			463			445
Securities gains (losses), net		–			–			–			–			–			–
Total net revenue		1,230			1,018			2,407			2,164			719			750
Noninterest expense		411			413			1,370			1,305			446			432
Other intangibles		–			1			4			5			3			3
Total noninterest expense		411			414			1,374			1,310			449			435
Income before provision and income taxes		819			604			1,033			854			270			315
Provision for credit losses		21			(16	)		110			79			(2	)		2
Income before income taxes		798			620			923			775			272			313
Income taxes and taxable-equivalent adjustment		200			155			231			194			68			78
Net income		598			465			692			581			204			235
Net (income) loss attributable to noncontrolling interests		–			–			–			–			–			–
Net income (loss) attributable to U.S. Bancorp	$	598		$	465		$	692		$	581		$	204		$	235
Average Balance Sheet
Loans	$	122,950		$	98,922		$	150,206		$	143,777		$	11,194		$	9,898
Other earning assets		3,847			3,883			6,576			3,333			285			341
Goodwill		1,647			1,647			3,475			3,475			1,616			1,617
Other intangible assets		6			9			1,935			2,717			40			50
Assets		135,504			108,823			167,501			157,445			14,308			13,178

Noninterest-bearing deposits		38,658			29,061			34,662			27,051			16,298			13,612
Interest-bearing deposits		95,373			70,740			144,319			128,932			65,300			61,417
Total deposits		134,031			99,801			178,981			155,983			81,598			75,029

Total U.S. Bancorp shareholders’ equity		17,295			15,436			14,973			15,119			2,478			2,432

	Payment Services						Treasury and Corporate Support						Consolidated Company
(Dollars in Millions)	2020			2019			2020			2019			2020			2019
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	602		$	585		$	(10	)	$	71		$	3,224		$	3,332
Noninterest income		658	(a)		952	(a)		151			265			2,533	(b)		2,473	(b)
Securities gains (losses), net		–			–			81			17			81			17
Total net revenue		1,260			1,537			222			353			5,838	(c)		5,822	(c)
Noninterest expense		722			737			326			224			3,275			3,111
Other intangibles		36			33			–			–			43			42
Total noninterest expense		758			770			326			224			3,318			3,153
Income before provision and income taxes		502			767			(104	)		129			2,520			2,669
Provision for credit losses		(31	)		295			1,639			5			1,737			365
Income before income taxes		533			472			(1,743	)		124			783			2,304
Income taxes and taxable-equivalent adjustment		133			118			(544	)		(69	)		88			476
Net income		400			354			(1,199	)		193			695			1,828
Net (income) loss attributable to noncontrolling interests		–			–			(6	)		(7	)		(6	)		(7	)
Net income (loss) attributable to U.S. Bancorp	$	400		$	354		$	(1,205	)	$	186		$	689		$	1,821
Average Balance Sheet
Loans	$	30,321		$	33,277		$	3,436		$	3,344		$	318,107		$	289,218
Other earning assets		447			327			164,857			129,831			176,012			137,715
Goodwill		3,101			2,806			–			–			9,839			9,545
Other intangible assets		590			533			–			–			2,571			3,309
Assets		35,473			39,588			191,520			152,564			544,306			471,598

Noninterest-bearing deposits		3,165			1,221			2,323			2,151			95,106			73,096
Interest-bearing deposits		117			115			3,088			10,932			308,197			272,136
Total deposits		3,282			1,336			5,411			13,083			403,303			345,232

Total U.S. Bancorp shareholders’ equity		5,876			6,043			11,619			13,408			52,241			52,438

(a)	Presented net of related rewards and rebate costs and certain partner payments of $445 million and $566 million for the three months ended June 30, 2020 and 2019, respectively.

(b)	Includes revenue generated from certain contracts with customers of $1.6 billion and $1.9 billion for the three months ended June 30, 2020 and 2019, respectively.

(c)

The Company, as a lessor, originates retail and commercial leases either directly to the consumer or indirectly through dealer networks. Under these arrangements, the Company recorded $230 million and $246 million of revenue for the three months ended June 30, 2020 and 2019, respectively, primarily consisting of interest income on sales-type and direct financing leases.

Business segment results for the six months ended June 30 were as follows:


	Corporate and Commercial Banking						Consumer and Business Banking						Wealth Management and Investment Services
(Dollars in Millions)	2020			2019			2020			2019			2020			2019
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	1,688		$	1,552		$	3,029		$	3,178		$	539		$	598
Noninterest income		613			452			1,678			1,102			927			875
Securities gains (losses), net		–			–			–			–			–			–
Total net revenue		2,301			2,004			4,707			4,280			1,466			1,473
Noninterest expense		832			820			2,684			2,555			879			853
Other intangibles		–			2			8			10			6			6
Total noninterest expense		832			822			2,692			2,565			885			859
Income before provision and income taxes		1,469			1,182			2,015			1,715			581			614
Provision for credit losses		446			7			233			149			21			(1	)
Income before income taxes		1,023			1,175			1,782			1,566			560			615
Income taxes and taxable-equivalent adjustment		256			294			446			392			140			154
Net income		767			881			1,336			1,174			420			461
Net (income) loss attributable to noncontrolling interests		–			–			–			–			–			–
Net income (loss) attributable to U.S. Bancorp	$	767		$	881		$	1,336		$	1,174		$	420		$	461
Average Balance Sheet
Loans	$	113,161		$	98,800		$	148,459		$	142,804		$	10,902		$	9,858
Other earning assets		4,201			3,527			5,772			2,864			283			293
Goodwill		1,647			1,647			3,475			3,475			1,616			1,617
Other intangible assets		7			9			2,170			2,799			42			52
Assets		125,409			108,063			164,630			156,103			14,129			13,180

Noninterest-bearing deposits		34,002			29,623			31,265			26,800			14,758			13,459
Interest-bearing deposits		88,017			70,959			139,041			128,135			67,041			57,805
Total deposits		122,019			100,582			170,306			154,935			81,799			71,264

Total U.S. Bancorp shareholders’ equity		16,553			15,389			14,952			15,060			2,472			2,437

	Payment Services						Treasury and Corporate Support						Consolidated Company
(Dollars in Millions)	2020			2019			2020			2019			2020			2019
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	1,253		$	1,202		$	(38	)	$	88		$	6,471		$	6,618
Noninterest income		1,452	(a)		1,806	(a)		338			524			5,008	(b)		4,759	(b)
Securities gains (losses), net		–			–			131			22			131			22
Total net revenue		2,705			3,008			431			634			11,610	(c)		11,399	(c)
Noninterest expense		1,448			1,445			706			485			6,549			6,158
Other intangibles		71			64			–			–			85			82
Total noninterest expense		1,519			1,509			706			485			6,634			6,240
Income before provision and income taxes		1,186			1,499			(275	)		149			4,976			5,159
Provision for credit losses		231			581			1,799			6			2,730			742
Income before income taxes		955			918			(2,074	)		143			2,246			4,417
Income taxes and taxable-equivalent adjustment		239			230			(709	)		(189	)		372			881
Net income		716			688			(1,365	)		332			1,874			3,536
Net (income) loss attributable to noncontrolling interests		–			–			(14	)		(16	)		(14	)		(16	)
Net income (loss) attributable to U.S. Bancorp	$	716		$	688		$	(1,379	)	$	316		$	1,860		$	3,520
Average Balance Sheet
Loans	$	32,005		$	32,848		$	3,355		$	3,362		$	307,882		$	287,672
Other earning assets		423			387			152,360			128,491			163,039			135,562
Goodwill		3,028			2,810			–			–			9,766			9,549
Other intangible assets		576			523			–			–			2,795			3,383
Assets		37,137			39,112			178,251			151,063			519,556			467,521

Noninterest-bearing deposits		2,318			1,198			2,281			2,183			84,624			73,263
Interest-bearing deposits		116			113			4,214			10,051			298,429			267,063
Total deposits		2,434			1,311			6,495			12,234			383,053			340,326

Total U.S. Bancorp shareholders’ equity		5,980			6,009			11,736			13,121			51,693			52,016

(a)	Presented net of related rewards and rebate costs and certain partner payments of $975 million and $1.1 billion for the six months ended June 30, 2020 and 2019, respectively.

(b)	Includes revenue generated from certain contracts with customers of $3.3 billion and $3.6 billion for the six months ended June 30, 2020 and 2019, respectively.

(c)

The Company, as a lessor, originates retail and commercial leases either directly to the consumer or indirectly through dealer networks. Under these arrangements, the Company recorded $468 million and $485 million of revenue for the six months ended June 30, 2020 and 2019, respectively, primarily consisting of interest income on sales-type and direct financing leases.