Business Segments

12 Months Ended

Dec. 31, 2022

Text Block [Abstract]

Business Segments

  NOTE 24   Business Segments

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 comprises consumer banking, small business banking and consumer lending. Products and services are delivered through banking offices, telephone servicing and sales, on-line services, direct mail, ATM processing, mobile devices, distributed mortgage loan officers, and intermediary relationships including auto dealerships, mortgage banks, and strategic business partners.

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 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, including merger and integration charges, are 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 2022, certain organization and methodology changes were made and, accordingly, 2021 results were restated and presented on a comparable basis. MUB related business activities were integrated into the applicable line of business results effective with the close of the acquisition by the Company.

Business segment results for the years ended December 31 were as follows:

	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)	$	3,468		$	2,853			$	6,904		$	6,085		$	1,624		$	1,002
Noninterest income		1,008			1,039				1,556			2,496			2,553			2,222
Total net revenue		4,476			3,892				8,460			8,581			4,177			3,224
Nointerest expense		1,872			1,741				5,824			5,575			2,417			2,094
Income (loss) before provision and income taxes		2,604			2,151				2,636			3,006			1,760			1,130
Provision for credit losses		149			65				228			(136	)		9			7
Income (loss) before income taxes		2,455			2,086				2,408			3,142			1,751			1,123
Income taxes and taxable-equivalent adjustment		614			522				602			785			438			281
Net income (loss)		1,841			1,564				1,806			2,357			1,313			842
Net (income) loss attributable to noncontrolling interests		–			–				–			–			–			–
Net income (loss) attributable to U.S. Bancorp	$	1,841		$	1,564			$	1,806		$	2,357		$	1,313		$	842
Average Balance Sheet
Loans	$	127,916		$	103,404			$	145,079		$	140,890		$	22,410		$	18,095
Other earning assets		4,532			4,537				3,117			8,093			273			242
Goodwill		1,915			1,715				3,249			3,429			1,720			1,628
Other intangible assets		57			5				3,785			2,761			308			84
Assets		143,370			115,423				160,713			161,385			26,036			21,303
Noninterest-bearing deposits		57,451			61,991				32,256			33,063			24,721			24,663
Interest-bearing deposits		97,169			71,711				167,938			157,592			73,461			76,000
Total deposits		154,620			133,702				200,194			190,655			98,182			100,663
Total U.S. Bancorp shareholders’ equity		14,403			13,906				12,550			12,319			3,675			3,154
	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)	$	2,498		$	2,457			$	352		$	203		$	14,846		$	12,600
Noninterest income		3,799	(a)		3,550	(a)			540			920			9,456	(b)		10,227	(b)
Total net revenue		6,297			6,007				892			1,123			24,302			22,827
Noninterest expense		3,551			3,386				1,242			932			14,906			13,728
Income (loss) before provision and income taxes		2,746			2,621				(350	)		191			9,396			9,099
Provision for credit losses		980			349				611			(1,458	)		1,977			(1,173	)
Income (loss) before income taxes		1,766			2,272				(961	)		1,649			7,419			10,272
Income taxes and taxable-equivalent adjustment		442			568				(515	)		131			1,581			2,287
Net income (loss)		1,324			1,704				(446	)		1,518			5,838			7,985
Net (income) loss attributable to noncontrolling interests		–			–				(13	)		(22	)		(13	)		(22	)
Net income (loss) attributable to U.S. Bancorp	$	1,324		$	1,704			$	(459	)	$	1,496		$	5,825		$	7,963
Average Balance Sheet
Loans	$	34,627		$	30,856			$	3,541		$	3,720		$	333,573		$	296,965
Other earning assets		634			93				203,214			196,211			211,770			209,176
Goodwill		3,305			3,184				–			–			10,189			9,956
Other intangible assets		423			507				4			–			4,577			3,357
Assets		41,109			36,549				220,921			221,872			592,149			556,532
Noninterest-bearing deposits		3,410			4,861				2,556			2,626			120,394			127,204
Interest-bearing deposits		162			145				3,260			1,629			341,990			307,077
Total deposits		3,572			5,006				5,816			4,255			462,384			434,281
Total U.S. Bancorp shareholders’ equity		8,235			7,642				11,553			16,789			50,416			53,810

(a) Presented net of related rewards and rebate costs and certain partner payments of $2.9 billion and $2.5 billion for 2022 and 2021, respectively.    

(b) Includes revenue generated from certain contracts with customers of $8.0 billion and $7.5 billion for 2022 and 2021, respectively.