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 2021, certain organization and methodology changes were made and, accordingly, 2020 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)	2021			2020			2021			2020			2021			2020
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	683		$	878		$	1,650		$	1,475		$	167		$	250
Noninterest income		255			339			646			886			547			499
Total net revenue		938			1,217			2,296			2,361			714			749
Noninterest expense		411			430			1,404			1,372			501			474
Other intangibles		–			–			3			4			4			3
Total noninterest expense		411			430			1,407			1,376			505			477
Income (loss) before provision and income taxes		527			787			889			985			209			272
Provision for credit losses		23			22			(96	)		110			10			(2	)
Income (loss) before income taxes		504			765			985			875			199			274
Income taxes and taxable-equivalent adjustment		126			191			246			219			50			69
Net income (loss)		378			574			739			656			149			205
Net (income) loss attributable to noncontrolling interests		–			–			–			–			–			–
Net income (loss) attributable to U.S. Bancorp	$	378		$	574		$	739		$	656		$	149		$	205
Average Balance Sheet
Loans	$	95,145		$	122,930		$	152,470		$	150,210		$	12,926		$	11,206
Other earning assets		4,409			3,847			8,033			6,576			237			285
Goodwill		1,647			1,647			3,475			3,475			1,618			1,616
Other intangible assets		5			6			2,827			1,935			84			40
Assets		107,058			135,484			173,285			167,514			15,916			14,335

Noninterest-bearing deposits		54,958			38,749			40,477			34,499			22,249			16,396
Interest-bearing deposits		66,023			95,388			174,356			144,158			61,146			65,466
Total deposits		120,981			134,137			214,833			178,657			83,395			81,862

Total U.S. Bancorp shareholders’ equity		13,200			15,274			13,361			13,752			2,640			2,481

	Payment Services						Treasury and Corporate Support						Consolidated Company
(Dollars in Millions)	2021			2020			2021			2020			2021			2020
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	596		$	610		$	68		$	11		$	3,164		$	3,224
Noninterest income		913	(a)		658	(a)		258			232			2,619	(b)		2,614	(b)
Total net revenue		1,509			1,268			326			243			5,783	(c)		5,838	(c)
Noninterest expense		794			741			237			258			3,347			3,275
Other intangibles		33			36			–			–			40			43
Total noninterest expense		827			777			237			258			3,387			3,318
Income (loss) before provision and income taxes		682			491			89			(15	)		2,396			2,520
Provision for credit losses		91			(31	)		(198	)		1,638			(170	)		1,737
Income (loss) before income taxes		591			522			287			(1,653	)		2,566			783
Income taxes and taxable-equivalent adjustment		148			131			8			(522	)		578			88
Net income (loss)		443			391			279			(1,131	)		1,988			695
Net (income) loss attributable to noncontrolling interests		–			–			(6	)		(6	)		(6	)		(6	)
Net income (loss) attributable to U.S. Bancorp	$	443		$	391		$	273		$	(1,137	)	$	1,982		$	689
Average Balance Sheet
Loans	$	30,030		$	30,321		$	3,713		$	3,440		$	294,284		$	318,107
Other earning assets		5			5			193,783			165,299			206,467			176,012
Goodwill		3,177			3,101			–			–			9,917			9,839
Other intangible assets		519			590			–			–			3,435			2,571
Assets		35,620			35,011			219,486			191,962			551,365			544,306

Noninterest-bearing deposits		5,030			3,165			2,583			2,297			125,297			95,106
Interest-bearing deposits		141			117			2,247			3,068			303,913			308,197
Total deposits		5,171			3,282			4,830			5,365			429,210			403,303

Total U.S. Bancorp shareholders’ equity		7,413			6,975			16,348			13,759			52,962			52,241

(a)	Presented net of related rewards and rebate costs and certain partner payments of $633 million and $445 million for the three months ended June 30, 2021 and 2020, respectively.

(b)	Includes revenue generated from certain contracts with customers of $1.9 billion and $1.6 billion for the three months ended June 30, 2021 and 2020, 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 $238 million and $230 million of revenue for the three months ended June 30, 2021 and 2020, 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)	2021			2020			2021			2020			2021			2020
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	1,355		$	1,663		$	3,277		$	3,007		$	370		$	534
Noninterest income		514			610			1,224			1,607			1,078			1,001
Total net revenue		1,869			2,273			4,501			4,614			1,448			1,535
Noninterest expense		816			873			2,783			2,689			980			941
Other intangibles		–			–			6			8			6			6
Total noninterest expense		816			873			2,789			2,697			986			947
Income (loss) before provision and income taxes		1,053			1,400			1,712			1,917			462			588
Provision for credit losses		(17	)		446			(140	)		233			18			21
Income (loss) before income taxes		1,070			954			1,852			1,684			444			567
Income taxes and taxable-equivalent adjustment		268			238			463			421			111			142
Net income (loss)		802			716			1,389			1,263			333			425
Net (income) loss attributable to noncontrolling interests		–			–			–			–			–			–
Net income (loss) attributable to U.S. Bancorp	$	802		$	716		$	1,389		$	1,263		$	333		$	425
Average Balance Sheet
Loans	$	95,006		$	113,147		$	152,822		$	148,462		$	12,688		$	10,909
Other earning assets		4,359			4,201			9,112			5,772			258			283
Goodwill		1,647			1,647			3,475			3,525			1,618			1,617
Other intangible assets		5			7			2,660			2,173			63			42
Assets		107,037			125,394			174,399			164,690			15,800			14,153

Noninterest-bearing deposits		53,027			34,074			39,757			31,130			21,318			14,848
Interest-bearing deposits		66,899			88,034			170,552			138,888			66,427			67,195
Total deposits		119,926			122,108			210,309			170,018			87,745			82,043

Total U.S. Bancorp shareholders’ equity		13,455			14,631			13,460			13,389			2,607			2,475

	Payment Services						Treasury and Corporate Support						Consolidated Company
(Dollars in Millions)	2021			2020			2021			2020			2021			2020
Condensed Income Statement
Net interest income (taxable-equivalent basis)	$	1,225		$	1,267		$	26		$	–		$	6,253		$	6,471
Noninterest income		1,698	(a)		1,452	(a)		486			469			5,000	(b)		5,139	(b)
Total net revenue		2,923			2,719			512			469			11,253	(c)		11,610	(c)
Noninterest expense		1,561			1,495			548			551			6,688			6,549
Other intangibles		66			71			–			–			78			85
Total noninterest expense		1,627			1,566			548			551			6,766			6,634
Income (loss) before provision and income taxes		1,296			1,153			(36	)		(82	)		4,487			4,976
Provision for credit losses		50			231			(908	)		1,799			(997	)		2,730
Income (loss) before income taxes		1,246			922			872			(1,881	)		5,484			2,246
Income taxes and taxable-equivalent adjustment		312			231			57			(660	)		1,211			372
Net income (loss)		934			691			815			(1,221	)		4,273			1,874
Net (income) loss attributable to noncontrolling interests		–			–			(11	)		(14	)		(11	)		(14	)
Net income (loss) attributable to U.S. Bancorp	$	934		$	691		$	804		$	(1,235	)	$	4,262		$	1,860
Average Balance Sheet
Loans	$	29,831		$	32,005		$	3,791		$	3,359		$	294,138		$	307,882
Other earning assets		5			6			191,367			152,777			205,101			163,039
Goodwill		3,176			2,977			–			–			9,916			9,766
Other intangible assets		531			573			–			–			3,259			2,795
Assets		35,359			36,647			217,462			178,672			550,057			519,556

Noninterest-bearing deposits		5,146			2,318			2,596			2,254			121,844			84,624
Interest-bearing deposits		137			116			1,936			4,196			305,951			298,429
Total deposits		5,283			2,434			4,532			6,450			427,795			383,053

Total U.S. Bancorp shareholders’ equity		7,535			7,042			15,789			14,156			52,846			51,693

(a)	Presented net of related rewards and rebate costs and certain partner payments of $1.2 billion and $975 million for the six months ended June 30, 2021 and 2020, respectively.

(b)	Includes revenue generated from certain contracts with customers of $3.6 billion and $3.3 billion for the six months ended June 30, 2021 and 2020, 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 $466 million and $468 million of revenue for the six months ended June 30, 2021 and 2020, respectively, primarily consisting of interest income on sales-type and direct financing leases.