Exhibit 99.1
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2Q23 Key Financial Data |
2Q23 Financial Highlights |
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PROFITABILITY METRICS |
2Q23 | 1Q23 | 2Q22 | |||||||||
Return on average assets (%) |
.81 | 1.03 | 1.06 | |||||||||
Return on average common equity (%) |
10.9 | 14.1 | 13.9 | |||||||||
Return on tangible common equity (%) (a) |
17.1 | 22.0 | 18.6 | |||||||||
Net interest margin (%) |
2.90 | 3.10 | 2.59 | |||||||||
Efficiency ratio (%) (a) |
63.7 | 63.2 | 62.1 | |||||||||
Tangible efficiency ratio (%) (a)
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61.5
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61.0
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61.5
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INCOME STATEMENT (b) |
2Q23 | 1Q23 | 2Q22 | |||||||||
Net interest income (taxable-equivalent basis) |
$4,449 | $4,668 | $3,464 | |||||||||
Noninterest income |
$2,726 | $2,507 | $2,548 | |||||||||
Net income attributable to U.S. Bancorp |
$1,361 | $1,698 | $1,531 | |||||||||
Diluted earnings per common share |
$.84 | $1.04 | $.99 | |||||||||
Dividends declared per common share
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$.48
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$.48
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$.46
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BALANCE SHEET (b) |
2Q23 | 1Q23 | 2Q22 | |||||||||
Average total loans |
$388,817 | $386,750 | $324,187 | |||||||||
Average total deposits |
$497,265 | $510,324 | $456,516 | |||||||||
Net charge-off ratio |
.67% | .39% | .20% | |||||||||
Book value per common share (period end) |
$30.14 | $30.12 | $28.13 | |||||||||
Basel III standardized CET1 (c) |
9.1% | 8.5% | 9.7% | |||||||||
(a) See Non-GAAP Financial Measures reconciliation on page 18 |
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(b) Dollars in millions, except per share data |
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(c) CET1 = Common equity tier 1 capital ratio |
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• CET1 capital ratio of 9.1% at June 30, 2023, compared with 8.5% at March 31, 2023
• Net income of $1,793 million and diluted earnings per common share of $1.12 as adjusted for notable items related to merger and integration-related charges associated with the acquisition of MUFG Union Bank (“MUB”) and balance sheet optimization activities
• Net revenue of $7,197 million as adjusted for notable items including $4,449 million of net interest income on a taxable- equivalent basis and $2,748 million of noninterest income
• Reported results included notable items related to merger and integration-related charges of $310 million and balance sheet optimization costs of $265 million, with a total impact, net of tax, of $(0.28) on diluted earnings per common share
• Return on average assets of 1.07%, return on average common equity of 14.6%, and efficiency ratio of 59.2% as adjusted for notable items
• Net interest income on a taxable-equivalent basis increased 28.4% year-over-year due to the impact of the acquisition of MUB and rising interest rates on earning assets and decreased 4.7% linked quarter due to deposit pricing
• Average total loan growth of 19.9% year-over-year and 0.5% on a linked quarter basis
• Average total deposit growth of 8.9% year-over-year and a decrease of 2.6% on a linked quarter basis |
CEO Commentary
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“In the second quarter, we successfully completed our conversion of Union Bank and further accelerated our accretion of capital, ending the quarter with a common equity tier 1 ratio of 9.1%. We posted diluted earnings per common share of $1.12, as adjusted, driven by continued momentum across our businesses supplemented by positive operating leverage on a linked quarter basis. We ended the quarter with $522 billion in total deposits, an increase of 3.2% versus the prior quarter. Our lower net interest margin this quarter reflects both higher levels of cash given debt ceiling concerns as well as higher deposit costs due to the rate environment. Credit quality remains strong, however we continued to strengthen our balance sheet by increasing our loan loss reserve reflecting prudent credit risk management.
Entering the second half of this year, we are well-positioned as a national bank with greater scale and the opportunity to capture significant cost synergies from Union Bank and to execute on revenue growth strategies that leverage our digital offerings, payment services capabilities and broad product set. I want to thank all our employees for their continued focus on best serving our clients, communities and shareholders.”
— Andy Cecere, Chairman, President and CEO, U.S. Bancorp
Business and Other Highlights
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Key metrics
• | MUB conversion was successfully completed over Memorial Day weekend, over 1.2 million consumer and small business customers were added, of which approximately 50% were digitally active in the first 30 days |
• | Robust liquidity highlighted by total available liquidity of $316 billion and a first quarter 2023 Liquidity Coverage Ratio (LCR) of 118% |
• | Ending total deposits increased 3.2% over linked quarter |
• | Strong fee growth of 9.6%, as adjusted, on a linked quarter basis |
• | Strong credit quality and diversified loan portfolio; with commercial real estate office accounting for only 2% of total loans and 1% of total commitments |
Notable Item Impacts 2Q23
($ in million, except per-share data) | Income Before Taxes |
Net Income Attributable to U.S. Bancorp |
Diluted Earnings Per Common Share |
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Reported |
$1,785 | $1,361 | $.84 | |||||||||
Notable items |
575 | 432 | .28 | |||||||||
Adjusted |
$2,360 | $1,793 | $1.12 | |||||||||
Notable Items | ||||||||||||
($ in millions) | 2Q23 | 1Q23 | 2Q22 | |||||||||
Balance sheet optimization |
$22 | $ — | $ — | |||||||||
Merger and integration charges |
310 | 244 | 197 | |||||||||
Provision for credit losses |
243 | — | — | |||||||||
Total notable items |
$575 | $244 | $197 |
Investor contact: George Andersen, 612.303.3620 | Media contact: Jeff Shelman, 612.303.9933
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U.S. Bancorp Second Quarter 2023 Results | |
INCOME STATEMENT HIGHLIGHTS | ||||||||||||||||||||||||||||||||||||||||||
($ in millions, except per-share data) | ADJUSTED (a) (b) | |||||||||||||||||||||||||||||||||||||||||
Percent Change | Percent Change | |||||||||||||||||||||||||||||||||||||||||
2Q | 1Q | 2Q | 2Q23 vs | 2Q23 vs | 2Q | 1Q | 2Q | 2Q23 vs | 2Q23 vs | |||||||||||||||||||||||||||||||||
2023 | 2023 | 2022 | 1Q23 | 2Q22 | 2023 | 2023 | 2022 | 1Q23 | 2Q22 | |||||||||||||||||||||||||||||||||
Net interest income |
$ | 4,415 | $ | 4,634 | $ | 3,435 | (4.7 | ) | 28.5 | $ | 4,415 | $ | 4,634 | $ | 3,435 | (4.7 | ) | 28.5 | ||||||||||||||||||||||||
Taxable-equivalent adjustment |
34 | 34 | 29 | -- | 17.2 | 34 | 34 | 29 | -- | 17.2 | ||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
4,449 | 4,668 | 3,464 | (4.7 | ) | 28.4 | 4,449 | 4,668 | 3,464 | (4.7 | ) | 28.4 | ||||||||||||||||||||||||||||||
Noninterest income |
2,726 | 2,507 | 2,548 | 8.7 | 7.0 | 2,748 | 2,507 | 2,548 | 9.6 | 7.8 | ||||||||||||||||||||||||||||||||
Total net revenue |
7,175 | 7,175 | 6,012 | -- | 19.3 | 7,197 | 7,175 | 6,012 | .3 | 19.7 | ||||||||||||||||||||||||||||||||
Noninterest expense |
4,569 | 4,555 | 3,724 | .3 | 22.7 | 4,259 | 4,311 | 3,527 | (1.2 | ) | 20.8 | |||||||||||||||||||||||||||||||
Income before provision and income taxes |
2,606 | 2,620 | 2,288 | (.5 | ) | 13.9 | 2,938 | 2,864 | 2,485 | 2.6 | 18.2 | |||||||||||||||||||||||||||||||
Provision for credit losses |
821 | 427 | 311 | 92.3 | nm | 578 | 427 | 311 | 35.4 | 85.9 | ||||||||||||||||||||||||||||||||
Income before taxes |
1,785 | 2,193 | 1,977 | (18.6 | ) | (9.7 | ) | 2,360 | 2,437 | 2,174 | (3.2 | ) | 8.6 | |||||||||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
416 | 489 | 443 | (14.9 | ) | (6.1 | ) | 559 | 550 | 487 | 1.6 | 14.8 | ||||||||||||||||||||||||||||||
Net income |
1,369 | 1,704 | 1,534 | (19.7 | ) | (10.8 | ) | 1,801 | 1,887 | 1,687 | (4.6 | ) | 6.8 | |||||||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
(8 | ) | (6 | ) | (3 | ) | (33.3 | ) | nm | (8 | ) | (6 | ) | (3 | ) | (33.3 | ) | nm | ||||||||||||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 1,361 | $ | 1,698 | $ | 1,531 | (19.8 | ) | (11.1 | ) | $ | 1,793 | $ | 1,881 | $ | 1,684 | (4.7 | ) | 6.5 | |||||||||||||||||||||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 1,281 | $ | 1,592 | $ | 1,464 | (19.5 | ) | (12.5 | ) | $ | 1,710 | $ | 1,773 | $ | 1,617 | (3.6 | ) | 5.8 | |||||||||||||||||||||||
Diluted earnings per common share |
$ | .84 | $ | 1.04 | $ | .99 | (19.2 | ) | (15.2 | ) | $ | 1.12 | $ | 1.16 | $ | 1.09 | (3.4 | ) | 2.8 | |||||||||||||||||||||||
(a) 2Q23 excludes $575 million ($432 million net-of-tax) of notable items including: $(22) million of noninterest income related to balance sheet repositioning and capital management actions, $310 million of merger and integration-related charges and $243 million of provision for credit losses related to balance sheet repositioning and capital management actions. 1Q23 excludes $244 million ($183 million net-of-tax) of merger and integration-related charges. 2Q22 excludes $197 million ($153 million net-of-tax) of merger and integration-related charges. |
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(b) See Non-GAAP Financial Measures reconciliation on page 18 |
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INCOME STATEMENT HIGHLIGHTS | ||||||||||||||||||||||||||
($ in millions, except per-share data) | ADJUSTED (c) (d) | |||||||||||||||||||||||||
YTD | YTD | Percent | YTD | YTD | Percent | |||||||||||||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||||
Net interest income |
$ | 9,049 | $ | 6,608 | 36.9 | $ | 9,049 | $ | 6,608 | 36.9 | ||||||||||||||||
Taxable-equivalent adjustment |
68 | 56 | 21.4 | 68 | 56 | 21.4 | ||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
9,117 | 6,664 | 36.8 | 9,117 | 6,664 | 36.8 | ||||||||||||||||||||
Noninterest income |
5,233 | 4,944 | 5.8 | 5,255 | 4,944 | 6.3 | ||||||||||||||||||||
Total net revenue |
14,350 | 11,608 | 23.6 | 14,372 | 11,608 | 23.8 | ||||||||||||||||||||
Noninterest expense |
9,124 | 7,226 | 26.3 | 8,570 | 7,029 | 21.9 | ||||||||||||||||||||
Income before provision and income taxes |
5,226 | 4,382 | 19.3 | 5,802 | 4,579 | 26.7 | ||||||||||||||||||||
Provision for credit losses |
1,248 | 423 | nm | 1,005 | 423 | nm | ||||||||||||||||||||
Income before taxes |
3,978 | 3,959 | .5 | 4,797 | 4,156 | 15.4 | ||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
905 | 867 | 4.4 | 1,109 | 911 | 21.7 | ||||||||||||||||||||
Net income |
3,073 | 3,092 | (.6 | ) | 3,688 | 3,245 | 13.7 | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
(14 | ) | (4 | ) | nm | (14 | ) | (4 | ) | nm | ||||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 3,059 | $ | 3,088 | (.9 | ) | $ | 3,674 | $ | 3,241 | 13.4 | |||||||||||||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 2,873 | $ | 2,930 | (1.9 | ) | $ | 3,483 | $ | 3,083 | 13.0 | |||||||||||||||
Diluted earnings per common share |
$ | 1.87 | $ | 1.97 | (5.1 | ) | $ | 2.27 | $ | 2.07 | 9.7 | |||||||||||||||
(c) 2023 excludes $819 million ($615 million net-of-tax) of notable items including: $(22) million of noninterest income related to balance sheet repositioning and capital management actions, $554 million of merger and integration-related charges and $243 million of provision for credit losses related to balance sheet repositioning and capital management actions. 2022 excludes $197 million ($153 million net-of-tax) of merger and integration-related charges. |
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(d) See Non-GAAP Financial Measures reconciliation on page 18 |
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2
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U.S. Bancorp Second Quarter 2023 Results | |
Net income attributable to U.S. Bancorp was $1,361 million for the second quarter of 2023, which was $170 million lower than the $1,531 million for the second quarter of 2022 and $337 million lower than the $1,698 million for the first quarter of 2023. Diluted earnings per common share were $0.84 in the second quarter of 2023, compared with $0.99 in the second quarter of 2022 and $1.04 in the first quarter of 2023. The second quarter of 2023 included $432 million, or $(0.28) per diluted common share, of notable items including merger and integration-related charges associated with the acquisition of MUB and activities to optimize balance sheet capital management, compared with $153 million $(0.10) per diluted common share in the second quarter of 2022, and $183 million, or $(0.12) per diluted common share, in the first quarter of 2023. On an adjusted basis, excluding the impacts of these notable items, net income applicable to common shareholders was $1,710 million, which was $93 million higher than the second quarter of 2022 and $63 million lower than the first quarter of 2023. Adjusted diluted earnings per common share were $1.12 in the second quarter of 2023, representing a 2.8 percent increase from the second quarter of 2022 and a 3.4 percent decrease from the first quarter of 2023.
The decrease in net income attributable to U.S. Bancorp year-over-year was driven by higher provision expense, including the balance sheet optimization activities, and noninterest expense, including the merger and integration-related charges, partially offset by higher total net revenue. Pretax income excluding notable items in the current quarter increased 8.6 percent compared with a year ago. Net interest income increased 28.4 percent on a year-over-year taxable-equivalent basis due to the impact of rising interest rates on earning assets and the impact of the MUB acquisition. The net interest margin increased to 2.90 percent in the second quarter of 2023 from 2.59 percent in the second quarter of 2022 primarily due to the impact of higher rates on earning assets and the acquisition of MUB. Noninterest income increased 7.0 percent (7.8 percent excluding notable items) compared with a year ago driven by higher payment services revenue, trust and investment management fees, and commercial products revenue. Noninterest expense increased 22.7 percent (20.8 percent excluding merger and integration-related charges), primarily driven by MUB operating expenses, including core deposit intangible amortization expense, and higher compensation expense to support business growth. Provision for credit losses increased $510 million ($267 million excluding notable items) compared with the second quarter of 2022 driven by the acquisition of MUB, normalizing credit losses and continued economic uncertainty.
Net income decreased 19.8 percent on a linked quarter basis reflecting lower net interest income and higher provision for credit losses, partially offset by higher noninterest income. Pretax income excluding notable items decreased 3.2 percent on a linked quarter basis. Net interest income decreased 4.7 percent on a taxable-equivalent basis due to deposit pricing, partially offset by the impact of rising interest rates on earning assets. The net interest margin decreased to 2.90 percent in the second quarter of 2023 from 3.10 percent in the first quarter of 2023 primarily due to deposit pricing and the impact of elevated cash balances, partially offset by the impact of rising interest rates on earning assets. Noninterest income increased 8.7 percent (9.6 percent excluding notable items) compared with the first quarter of 2023 driven by higher payment services revenue, trust and investment management fees, commercial products revenue, mortgage banking revenue, and gains on securities. Noninterest expense increased 0.3 percent on a linked quarter basis driven by merger and integration-related charges. Excluding merger and integration-related charges, noninterest expense decreased 1.2 percent due to prudent expense management and a reduction in the liability for future delivery contingencies within the merchant processing business. Provision for credit losses increased $394 million ($151 million excluding notable items) compared with the first quarter primarily due to normalizing credit losses and continued economic uncertainty.
3
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U.S. Bancorp Second Quarter 2023 Results | |
NET INTEREST INCOME | ||||||||||||||||||||||||||||||||
(Taxable-equivalent basis; $ in millions) | Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Change | |||||||||||||||||||||||||
Components of net interest income |
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Income on earning assets |
$7,562 | $6,999 | $3,854 | $563 | $3,708 | $14,561 | $7,299 | $7,262 | ||||||||||||||||||||||||
Expense on interest-bearing liabilities |
3,113 | 2,331 | 390 | 782 | 2,723 | 5,444 | 635 | 4,809 | ||||||||||||||||||||||||
Net interest income |
$4,449 | $4,668 | $3,464 | $(219) | $985 | $9,117 | $6,664 | $2,453 | ||||||||||||||||||||||||
Average yields and rates paid |
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Earning assets yield |
4.94% | 4.65% | 2.88% | .29% | 2.06% | 4.80% | 2.75% | 2.05% | ||||||||||||||||||||||||
Rate paid on interest-bearing liabilities |
2.60 | 2.06 | .40 | .54 | 2.20 | 2.34 | .33 | 2.01 | ||||||||||||||||||||||||
Gross interest margin |
2.34% | 2.59% | 2.48% | (.25)% | (.14)% | 2.46% | 2.42% | .04% | ||||||||||||||||||||||||
Net interest margin |
2.90% | 3.10% | 2.59% | (.20)% | .31% | 3.00% | 2.51% | .49% | ||||||||||||||||||||||||
Average balances |
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Investment securities (a) |
$159,824 | $166,125 | $171,296 | $(6,301) | $(11,472) | $162,957 | $173,019 | $(10,062) | ||||||||||||||||||||||||
Loans |
388,817 | 386,750 | 324,187 | 2,067 | 64,630 | 387,789 | 318,608 | 69,181 | ||||||||||||||||||||||||
Interest-bearing deposits with banks |
51,972 | 43,305 | 31,116 | 8,667 | 20,856 | 47,662 | 30,487 | 17,175 | ||||||||||||||||||||||||
Earning assets |
613,839 | 607,614 | 536,761 | 6,225 | 77,078 | 610,744 | 533,318 | 77,426 | ||||||||||||||||||||||||
Interest-bearing liabilities |
480,450 | 458,074 | 390,373 | 22,376 | 90,077 | 469,324 | 384,332 | 84,992 | ||||||||||||||||||||||||
(a) Excludes unrealized gain (loss) |
Net interest income on a taxable-equivalent basis in the second quarter of 2023 was $4,449 million, an increase of $985 million (28.4 percent) over the second quarter of 2022. The increase was primarily due to the impact of rising interest rates on earning assets and the acquisition of MUB. Average earning assets were $77.1 billion (14.4 percent) higher than the second quarter of 2022, reflecting increases of $64.6 billion (19.9 percent) in average total loans and $20.9 billion (67.0 percent) in average interest-bearing deposits with banks. Average investment securities decreased $11.5 billion (6.7 percent) reflecting balance sheet repositioning and liquidity management in connection with the acquisition of MUB.
Net interest income on a taxable-equivalent basis decreased $219 million (4.7 percent) on a linked quarter basis primarily due to the impact of deposit pricing, partially offset by higher rates on earning assets. Average earning assets were $6.2 billion (1.0 percent) higher on a linked quarter basis, reflecting increases of $2.1 billion (0.5 percent) in average total loans and $8.7 billion (20.0 percent) in cash deposits with other banks. Average investment securities decreased by $6.3 billion (3.8 percent) reflecting balance sheet repositioning and liquidity management in connection with the acquisition of MUB.
The net interest margin in the second quarter of 2023 was 2.90 percent, compared with 2.59 percent in the second quarter of 2022 and 3.10 percent in the first quarter of 2023. The increase in the net interest margin from the prior year was primarily due to the impact of higher rates on earning assets and the acquisition of MUB. The decrease in the net interest margin on a linked quarter basis reflected the impact of maintaining higher cash balances given the debt ceiling concerns and deposit pricing, partially offset by rising interest rates on earning assets.
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U.S. Bancorp Second Quarter 2023 Results | |
AVERAGE LOANS | ||||||||||||||||||||||||||||||||
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
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Commercial |
$133,697 | $131,227 | $115,758 | 1.9 | 15.5 | $ | 132,469 | $ | 111,810 | 18.5 | ||||||||||||||||||||||
Lease financing |
4,388 | 4,456 | 4,899 | (1.5 | ) | (10.4 | ) | 4,422 | 4,951 | (10.7 | ) | |||||||||||||||||||||
Total commercial |
138,085 | 135,683 | 120,657 | 1.8 | 14.4 | 136,891 | 116,761 | 17.2 | ||||||||||||||||||||||||
Commercial mortgages |
43,214 | 43,627 | 29,676 | (.9 | ) | 45.6 | 43,420 | 29,253 | 48.4 | |||||||||||||||||||||||
Construction and development |
11,720 | 11,968 | 9,841 | (2.1 | ) | 19.1 | 11,843 | 10,049 | 17.9 | |||||||||||||||||||||||
Total commercial real estate |
54,934 | 55,595 | 39,517 | (1.2 | ) | 39.0 | 55,263 | 39,302 | 40.6 | |||||||||||||||||||||||
Residential mortgages |
117,606 | 116,287 | 80,228 | 1.1 | 46.6 | 116,950 | 78,847 | 48.3 | ||||||||||||||||||||||||
Credit card |
26,046 | 25,569 | 22,748 | 1.9 | 14.5 | 25,809 | 22,297 | 15.8 | ||||||||||||||||||||||||
Retail leasing |
4,829 | 5,241 | 6,708 | (7.9 | ) | (28.0 | ) | 5,034 | 6,908 | (27.1 | ) | |||||||||||||||||||||
Home equity and second mortgages |
12,753 | 12,774 | 10,726 | (.2 | ) | 18.9 | 12,763 | 10,561 | 20.9 | |||||||||||||||||||||||
Other |
34,564 | 35,601 | 43,603 | (2.9 | ) | (20.7 | ) | 35,079 | 43,932 | (20.2 | ) | |||||||||||||||||||||
Total other retail |
52,146 | 53,616 | 61,037 | (2.7 | ) | (14.6 | ) | 52,876 | 61,401 | (13.9 | ) | |||||||||||||||||||||
Total loans |
$388,817 | $386,750 | $324,187 | .5 | 19.9 | $ | 387,789 | $ | 318,608 | 21.7 |
Average total loans for the second quarter of 2023 were $64.6 billion (19.9 percent) higher than the second quarter of 2022. The increase was driven by growth in the Company’s legacy loan portfolio as well as from the MUB acquisition, which are primarily reflected in commercial loans, commercial mortgages and residential mortgages. Increases in total commercial loans (14.4 percent), total commercial real estate loans (39.0 percent), residential mortgages (46.6 percent) and credit card loans (14.5 percent) were partially offset by lower total other retail loans (14.6 percent). The increase in legacy portfolio commercial loans was due to higher utilization driven by working capital needs of corporate customers, slower pay-offs given higher volatility in the capital markets and core growth. The increase in legacy residential mortgages was driven by on-balance sheet loan activities and slower refinancing activity. The increase in credit card loans was primarily driven by higher spend volumes, account growth and lower payment rates. The decrease in other retail loans was primarily due to balance sheet optimization activities.
Average total loans were $2.1 billion (0.5 percent) higher than the first quarter of 2023. Increases in total commercial loans (1.8 percent), residential mortgages (1.1 percent) and credit card loans (1.9 percent) were partially offset by lower total commercial real estate loans (1.2 percent) and lower total other retail loans (2.7 percent).
5
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U.S. Bancorp Second Quarter 2023 Results | |
AVERAGE DEPOSITS | ||||||||||||||||||||||||||||||||
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
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Noninterest-bearing deposits |
$ | 113,758 | $ | 129,741 | $ | 120,827 | (12.3 | ) | (5.9 | ) | $ | 121,705 | $ | 124,375 | (2.1 | ) | ||||||||||||||||
Interest-bearing savings deposits |
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Interest checking |
127,994 | 129,350 | 116,878 | (1.0 | ) | 9.5 | 128,668 | 115,975 | 10.9 | |||||||||||||||||||||||
Money market savings |
152,893 | 146,970 | 123,788 | 4.0 | 23.5 | 149,948 | 121,700 | 23.2 | ||||||||||||||||||||||||
Savings accounts |
58,993 | 68,827 | 68,127 | (14.3 | ) | (13.4 | ) | 63,883 | 67,555 | (5.4 | ) | |||||||||||||||||||||
Total savings deposits |
339,880 | 345,147 | 308,793 | (1.5 | ) | 10.1 | 342,499 | 305,230 | 12.2 | |||||||||||||||||||||||
Time deposits |
43,627 | 35,436 | 26,896 | 23.1 | 62.2 | 39,554 | 25,747 | 53.6 | ||||||||||||||||||||||||
Total interest-bearing deposits |
383,507 | 380,583 | 335,689 | .8 | 14.2 | 382,053 | 330,977 | 15.4 | ||||||||||||||||||||||||
Total deposits |
$ | 497,265 | $ | 510,324 | $ | 456,516 | (2.6 | ) | 8.9 | $ | 503,758 | $ | 455,352 | 10.6 |
Average total deposits for the second quarter of 2023 were $40.7 billion (8.9 percent) higher than the second quarter of 2022, including the impact of the MUB acquisition. Average noninterest-bearing deposits decreased $7.1 billion (5.9 percent) driven by decreases within Corporate and Commercial Banking and Wealth Management and Investment Services, partially offset by the impact of the acquisition of MUB. Average total savings deposits were $31.1 billion (10.1 percent) higher year-over-year driven by increases within Corporate and Commercial Banking and Consumer and Business Banking, including the impact of the acquisition of MUB. Average time deposits were $16.7 billion (62.2 percent) higher than the prior year second quarter due to the acquisition of MUB and increases across most business lines. Changes in time deposits are primarily related to those deposits managed as an alternative to other funding sources, based largely on relative pricing and liquidity characteristics.
Average total deposits decreased $13.1 billion (2.6 percent) from the first quarter of 2023. On a linked quarter basis, average noninterest-bearing deposits decreased $16.0 billion (12.3 percent) driven by an at conversion reclassification of MUB retail checking balances to create a better customer experience and pricing pressures from rising interest rates. Average total savings deposits decreased $5.3 billion (1.5 percent) driven by decreases within Consumer and Business Banking and Wealth Management and Investment Services, partially offset by increases within Corporate and Commercial Banking. Average time deposits were $8.2 billion (23.1 percent) higher on a linked quarter basis across Consumer and Business Banking and Wealth Management and Investment Services, partially offset by decreases within Corporate and Commercial Banking. Changes in time deposits are primarily related to those deposits managed as an alternative to other funding sources, based largely on relative pricing and liquidity characteristics. Ending total deposits at June 30, 2023, were $16.3 billion (3.2 percent) higher than March 31, 2023, reflecting the normal operational fluctuation of deposits associated with corporate trust activities.
The Company maintains a diverse and stable funding base that includes a mix of both consumer and operational wholesale deposits and continues to actively manage the composition in the current environment. Consumer deposits account for more than 50 percent of total deposits and a significant portion of the operational wholesale deposits are contractual or relationship based, not yield-seeking. At June 30, 2023, approximately 50 percent of deposits are insured through the FDIC insurance fund. Of the uninsured deposits, approximately 80 percent of these deposits are retail customers or operational in nature, which are generally more stable. In addition, the Company has total available liquidity representing 120 percent of uninsured balances.
6
|
U.S. Bancorp Second Quarter 2023 Results | |
NONINTEREST INCOME | ||||||||||||||||||||||||||||||||
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
|||||||||||||||||||||||||
Card revenue |
$ | 422 | $ | 360 | $ | 399 | 17.2 | 5.8 | $ | 782 | $ | 737 | 6.1 | |||||||||||||||||||
Corporate payment products revenue |
190 | 189 | 172 | .5 | 10.5 | 379 | 330 | 14.8 | ||||||||||||||||||||||||
Merchant processing services |
436 | 387 | 425 | 12.7 | 2.6 | 823 | 788 | 4.4 | ||||||||||||||||||||||||
Trust and investment management fees |
621 | 590 | 566 | 5.3 | 9.7 | 1,211 | 1,066 | 13.6 | ||||||||||||||||||||||||
Service charges |
324 | 324 | 334 | -- | (3.0 | ) | 648 | 667 | (2.8 | ) | ||||||||||||||||||||||
Commercial products revenue |
358 | 334 | 290 | 7.2 | 23.4 | 692 | 556 | 24.5 | ||||||||||||||||||||||||
Mortgage banking revenue |
161 | 128 | 142 | 25.8 | 13.4 | 289 | 342 | (15.5 | ) | |||||||||||||||||||||||
Investment products fees |
68 | 68 | 59 | -- | 15.3 | 136 | 121 | 12.4 | ||||||||||||||||||||||||
Securities gains (losses), net |
3 | (32 | ) | 19 | nm | (84.2 | ) | (29 | ) | 37 | nm | |||||||||||||||||||||
Other |
165 | 159 | 142 | 3.8 | 16.2 | 324 | 300 | 8.0 | ||||||||||||||||||||||||
Total before balance sheet optimization |
2,748 | 2,507 | 2,548 | 9.6 | 7.8 | 5,255 | 4,944 | 6.3 | ||||||||||||||||||||||||
Balance sheet optimization |
(22 | ) | -- | -- | nm | nm | (22 | ) | -- | nm | ||||||||||||||||||||||
Total noninterest income |
$ | 2,726 | $ | 2,507 | $ | 2,548 | 8.7 | 7.0 | $ | 5,233 | $ | 4,944 | 5.8 |
Second quarter noninterest income of $2,726 million was $178 million (7.0 percent) higher than the second quarter of 2022. Excluding notable items of $(22) million in the second quarter of 2023, second quarter noninterest income increased $200 (7.8 percent) compared with the second quarter of 2022 driven by higher payment services revenue, trust and investment management fees, commercial products revenue and other noninterest income. Payment services revenue increased $52 million (5.2 percent) compared with the second quarter of 2022. Within payment services, card revenue increased $23 million (5.8 percent) driven by higher rates and sales volume, and corporate payment products revenue increased $18 million (10.5 percent) due to higher business spending. Trust and investment management fees increased $55 million (9.7 percent) driven by the acquisition of MUB and core business growth. Commercial products revenue increased $68 million (23.4 percent) driven by higher trading revenue, corporate bond fees, and commercial loan fees. Other revenue increased $23 million (16.2 percent).
Noninterest income was $219 million (8.7 percent) higher in the second quarter of 2023 compared with the first quarter of 2023. Excluding notable items of $(22) million in the second quarter of 2023, second quarter noninterest income increased $241 (9.6 percent) compared with the first quarter of 2023 driven by higher payment services revenue, trust and investment management fees, commercial products revenue and gains on securities. Payment services revenue increased $112 million (12.0 percent) compared with the first quarter of 2023. Within payment services, card revenue increased $62 million (17.2 percent) driven by higher rates and sales volume and merchant processing services revenue increased $49 million (12.7 percent) driven by price increases. Trust and investment management fees increased $31 million (5.3 percent) primarily due to core business growth and an increase in fees driven by higher market rates. Commercial products revenue increased $24 million (7.2 percent) driven by an increase in trading revenue, corporate bond fees and commercial leasing.
7
|
U.S. Bancorp Second Quarter 2023 Results | |
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q | 1Q | 2Q | 2Q23 vs | 2Q23 vs | YTD | YTD | Percent | |||||||||||||||||||||||||
2023 | 2023 | 2022 | 1Q23 | 2Q22 | 2023 | 2022 | Change | |||||||||||||||||||||||||
Compensation and employee benefits |
$ | 2,646 | $ | 2,646 | $ | 2,246 | -- | 17.8 | $ | 5,292 | $ | 4,495 | 17.7 | |||||||||||||||||||
Net occupancy and equipment |
316 | 321 | 265 | (1.6 | ) | 19.2 | 637 | 534 | 19.3 | |||||||||||||||||||||||
Professional services |
141 | 134 | 111 | 5.2 | 27.0 | 275 | 225 | 22.2 | ||||||||||||||||||||||||
Marketing and business development |
122 | 122 | 106 | -- | 15.1 | 244 | 186 | 31.2 | ||||||||||||||||||||||||
Technology and communications |
522 | 503 | 419 | 3.8 | 24.6 | 1,025 | 840 | 22.0 | ||||||||||||||||||||||||
Other intangibles |
159 | 160 | 40 | (.6 | ) | nm | 319 | 87 | nm | |||||||||||||||||||||||
Other |
353 | 425 | 340 | (16.9 | ) | 3.8 | 778 | 662 | 17.5 | |||||||||||||||||||||||
Total before merger and integration |
4,259 | 4,311 | 3,527 | (1.2 | ) | 20.8 | 8,570 | 7,029 | 21.9 | |||||||||||||||||||||||
Merger and integration charges |
310 | 244 | 197 | 27.0 | 57.4 | 554 | 197 | nm | ||||||||||||||||||||||||
Total noninterest expense |
$ | 4,569 | $ | 4,555 | $ | 3,724 | .3 | 22.7 | $ | 9,124 | $ | 7,226 | 26.3 | |||||||||||||||||||
Second quarter noninterest expense of $4,569 million was $845 million (22.7 percent) higher than the second quarter of 2022. Excluding merger and integration-related charges of $310 million in the second quarter of 2023 and $197 million in the second quarter of 2022, second quarter noninterest expense increased $732 million (20.8 percent) compared with the second quarter of 2022, driven by the impact of MUB operating expenses, core deposit intangible amortization expense, higher compensation expense and higher other noninterest expense. Compensation expense increased $400 million (17.8 percent) compared with the second quarter of 2022 primarily due to MUB expense as well as merit and hiring to support business growth. Intangible amortization increased $119 million driven by the core deposit intangible created as a result of the MUB acquisition. Other noninterest expense increased $13 million (3.8 percent) due to higher FDIC insurance expense driven by an increase in the assessment base and rate along with the inclusion of MUB in the current year, partially offset by lower accruals related to future delivery exposures for merchant and airline processing and other liabilities.
Noninterest expense increased $14 million (0.3 percent) on a linked quarter basis. Excluding merger and integration-related charges of $310 million in the second quarter of 2023 and $244 million in the first quarter of 2023, second quarter noninterest expense decreased $52 million (1.2 percent) from the first quarter of 2023 driven by lower other noninterest expense. Other noninterest expense decreased $72 million (16.9 percent) primarily due to lower accruals related to future delivery exposures for merchant and airline processing and other liabilities.
Provision for Income Taxes
The provision for income taxes for the second quarter of 2023 resulted in a tax rate of 23.3 percent on a taxable-equivalent basis (effective tax rate of 21.8 percent), compared with 22.4 percent on a taxable-equivalent basis (effective tax rate of 21.3 percent) in the second quarter of 2022, and a tax rate of 22.3 percent on a taxable-equivalent basis (effective tax rate of 21.1 percent) in the first quarter of 2023.
8
|
U.S. Bancorp Second Quarter 2023 Results | |
ALLOWANCE FOR CREDIT LOSSES | ||||||||||||||||||||||||||||||||||||||||
($ in millions) | 2Q | 1Q | 4Q | 3Q | 2Q | |||||||||||||||||||||||||||||||||||
2023 | % (a) | 2023 | % (a) | 2022 | % (a) | 2022 | % (a) | 2022 | % (a) | |||||||||||||||||||||||||||||||
Balance, beginning of period |
$ | 7,523 | $ | 7,404 | $ | 6,455 | $ | 6,255 | $ | 6,105 | ||||||||||||||||||||||||||||||
Change in accounting principle (b) |
-- | (62 | ) | -- | -- | -- | ||||||||||||||||||||||||||||||||||
Allowance for acquired credit losses (c) |
-- | 127 | 336 | -- | -- | |||||||||||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Total excluding acquisition and optimization impacts |
340 | .35 | 282 | .30 | 210 | .23 | 162 | .19 | 161 | .20 | ||||||||||||||||||||||||||||||
Balance sheet optimization impact |
309 | -- | 189 | -- | -- | |||||||||||||||||||||||||||||||||||
Acquisition impact |
-- | 91 | 179 | -- | -- | |||||||||||||||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total net charge-offs |
649 | .67 | 373 | .39 | 578 | .64 | 162 | .19 | 161 | .20 | ||||||||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||||||||||
Total excluding acquisition and optimization impacts |
578 | 427 | 401 | 362 | 311 | |||||||||||||||||||||||||||||||||||
Balance sheet optimization impact |
243 | -- | 129 | -- | -- | |||||||||||||||||||||||||||||||||||
Acquisition impact of initial provision |
-- | -- | 662 | -- | -- | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total provision for credit losses |
821 | 427 | 1,192 | 362 | 311 | |||||||||||||||||||||||||||||||||||
Other changes |
-- | -- | (1 | ) | -- | -- | ||||||||||||||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Balance, end of period |
$ | 7,695 | $ | 7,523 | $ | 7,404 | $ | 6,455 | $ | 6,255 | ||||||||||||||||||||||||||||||
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Components |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
$ | 7,164 | $ | 7,020 | $ | 6,936 | $ | 6,017 | $ | 5,832 | ||||||||||||||||||||||||||||||
Liability for unfunded credit commitments |
531 | 503 | 468 | 438 | 423 | |||||||||||||||||||||||||||||||||||
|
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|
|
|
|
|||||||||||||||||||||||||||||||
Total allowance for credit losses |
$ | 7,695 | $ | 7,523 | $ | 7,404 | $ | 6,455 | $ | 6,255 | ||||||||||||||||||||||||||||||
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Allowance for credit losses as a percentage of |
||||||||||||||||||||||||||||||||||||||||
Period-end loans (%) |
2.03 | 1.94 | 1.91 | 1.88 | 1.88 | |||||||||||||||||||||||||||||||||||
Nonperforming loans (%) |
739 | 660 | 762 | 1,025 | 863 | |||||||||||||||||||||||||||||||||||
Nonperforming assets (%) |
709 | 637 | 729 | 953 | 812 | |||||||||||||||||||||||||||||||||||
(a) Annualized and calculated on average loan balances (b) Effective January 1, 2023, the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings (c) Allowance for purchased credit deteriorated and charged-off loans acquired from MUB |
|
SUMMARY OF NET CHARGE-OFFS | ||||||||||||||||||||||||||||||||||||||||
($ in millions) | 2Q | 1Q | 4Q | 3Q | 2Q | |||||||||||||||||||||||||||||||||||
2023 | % (a) | 2023 | % (a) | 2022 | % (a) | 2022 | % (a) | 2022 | % (a) | |||||||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Commercial |
$ | 87 | .26 | $ | 42 | .13 | $ | 133 | .41 | $ | 24 | .08 | $ | 28 | .10 | |||||||||||||||||||||||||
Lease financing |
3 | .27 | 5 | .46 | 5 | .43 | 3 | .25 | 2 | .16 | ||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
Total commercial |
90 | .26 | 47 | .14 | 138 | .41 | 27 | .08 | 30 | .10 | ||||||||||||||||||||||||||||||
Commercial mortgages |
26 | .24 | 115 | 1.07 | 25 | .28 | (6 | ) | (.08 | ) | (2 | ) | (.03 | ) | ||||||||||||||||||||||||||
Construction and development |
-- | -- | 2 | .07 | 17 | .63 | -- | -- | 8 | .33 | ||||||||||||||||||||||||||||||
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Total commercial real estate |
26 | .19 | 117 | .85 | 42 | .36 | (6 | ) | (.06 | ) | 6 | .06 | ||||||||||||||||||||||||||||
Residential mortgages |
114 | .39 | (1 | ) | -- | (3 | ) | (.01 | ) | (5 | ) | (.02 | ) | (9 | ) | (.04 | ) | |||||||||||||||||||||||
Credit card |
199 | 3.06 | 175 | 2.78 | 175 | 2.76 | 119 | 1.96 | 118 | 2.08 | ||||||||||||||||||||||||||||||
Retail leasing |
1 | .08 | 1 | .08 | 1 | .07 | 1 | .06 | -- | -- | ||||||||||||||||||||||||||||||
Home equity and second mortgages |
(1 | ) | (.03 | ) | (1 | ) | (.03 | ) | -- | -- | (2 | ) | (.07 | ) | (3 | ) | (.11 | ) | ||||||||||||||||||||||
Other |
220 | 2.55 | 35 | .40 | 225 | 2.17 | 28 | .26 | 19 | .17 | ||||||||||||||||||||||||||||||
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Total other retail |
220 | 1.69 | 35 | .26 | 226 | 1.52 | 27 | .18 | 16 | .11 | ||||||||||||||||||||||||||||||
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Total net charge-offs |
$ | 649 | .67 | $ | 373 | .39 | $ | 578 | .64 | $ | 162 | .19 | $ | 161 | .20 | |||||||||||||||||||||||||
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Gross charge-offs |
$ | 755 | $ | 469 | $ | 669 | $ | 275 | $ | 276 | ||||||||||||||||||||||||||||||
Gross recoveries |
$ | 106 | $ | 96 | $ | 91 | $ | 113 | $ | 115 | ||||||||||||||||||||||||||||||
(a) Annualized and calculated on average loan balances |
|
9
|
U.S. Bancorp Second Quarter 2023 Results | |
The Company’s provision for credit losses for the second quarter of 2023 was $821 million, compared with $427 million in the first quarter of 2023 and $311 million in the second quarter of 2022. The second quarter of 2023 provision was $394 million (92.3 percent) higher than the first quarter of 2023 and $510 million higher than the second quarter of 2022. Excluding the notable item related to balance sheet optimization activities, the provision for credit losses for the second quarter of 2023 increased $151 million (35.4 percent) compared with the first quarter of 2023 and $267 million (85.9 percent) compared with the second quarter of 2022. During 2022 and continuing into 2023, economic uncertainty and recession risk have been increasing due to rising interest rates, inflationary concerns, market volatility, and pressure on corporate earnings related to these factors. Expected loss estimates consider various factors including customer specific information impacting changes in risk ratings, projected delinquencies, and the impact of economic deterioration on borrowers’ liquidity and ability to repay. While these credit quality factors have continued to perform better than pre-pandemic levels, the changing economic outlook is contributing to increased provision for credit losses. Consumer portfolio credit losses are stabilizing amid rising delinquencies and lower collateral values. Some stress in commercial portfolios is also anticipated as the impact of rising interest rates filters through financials. Commercial real estate valuations are also affected by rising interest rates and the changing demand for office properties.
Total net charge-offs in the second quarter of 2023 were $649 million, compared with $373 million in the first quarter of 2023 and $161 million in the second quarter of 2022. Net charge-offs for the second quarter of 2023 included $309 million of charge-offs related to balance sheet optimization activities. Net charge-offs for the first quarter of 2023 included $91 million of charge-offs related to uncollectible acquired loans, considered purchase credit deteriorated as of the date of the MUB acquisition. The net charge-off ratio was 0.67 percent in the second quarter of 2023 (0.35 percent excluding the impact of the balance sheet optimization activities), compared with 0.39 percent in the first quarter of 2023 (0.30 percent excluding the impact of the MUB acquisition-related charge-offs) and 0.20 percent in the second quarter of 2022. Net charge-offs, excluding the impact of the balance sheet optimization activities and acquisition-related charge offs, increased $58 million (20.6 percent) compared with the first quarter of 2023 and $179 million compared with the second quarter of 2022, reflecting higher charge-offs in most loan categories consistent with normalizing credit conditions.
The allowance for credit losses was $7,695 million at June 30, 2023, compared with $7,523 million at March 31, 2023, and $6,255 million at June 30, 2022. The increase in the allowance for credit losses was primarily driven by economic uncertainty and normalizing credit losses. The ratio of the allowance for credit losses to period-end loans was 2.03 percent at June 30, 2023, compared with 1.94 percent at March 31, 2023, and 1.88 percent at June 30, 2022. The ratio of the allowance for credit losses to nonperforming loans was 739 percent at June 30, 2023, compared with 660 percent at March 31, 2023, and 863 percent at June 30, 2022.
Nonperforming assets were $1,085 million at June 30, 2023, compared with $1,181 million at March 31, 2023, and $770 million at June 30, 2022. The ratio of nonperforming assets to loans and other real estate was 0.29 percent at June 30, 2023, compared with 0.30 percent at March 31, 2023, and 0.23 percent at June 30, 2022. The decrease in nonperforming assets on a linked quarter basis was primarily due to lower residential mortgage and commercial real estate nonperforming loans. The year-over-year increase in nonperforming assets primarily reflected nonperforming assets acquired from MUB. Accruing loans 90 days or more past due were $474 million at June 30, 2023, compared with $494 million at March 31, 2023, and $423 million at June 30, 2022.
10
|
U.S. Bancorp Second Quarter 2023 Results | |
DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES | ||||||||||||||||||||
(Percent) | Jun 30 2023 |
Mar 31 2023 |
Dec 31 2022 |
Sep 30 2022 |
Jun 30 2022 |
|||||||||||||||
Delinquent loan ratios - 90 days or more past due |
|
|||||||||||||||||||
Commercial |
.04 | .05 | .07 | .03 | .07 | |||||||||||||||
Commercial real estate |
-- | .01 | .01 | .05 | .01 | |||||||||||||||
Residential mortgages |
.08 | .08 | .08 | .10 | .12 | |||||||||||||||
Credit card |
1.02 | 1.00 | .88 | .74 | .69 | |||||||||||||||
Other retail |
.12 | .12 | .12 | .11 | .10 | |||||||||||||||
Total loans |
.12 | .13 | .13 | .11 | .13 | |||||||||||||||
Delinquent loan ratios - 90 days or more past due and nonperforming loans |
|
|||||||||||||||||||
Commercial |
.21 | .18 | .19 | .12 | .19 | |||||||||||||||
Commercial real estate |
.87 | .98 | .62 | .46 | .53 | |||||||||||||||
Residential mortgages |
.26 | .33 | .36 | .35 | .40 | |||||||||||||||
Credit card |
1.02 | 1.01 | .88 | .74 | .69 | |||||||||||||||
Other retail |
.39 | .37 | .37 | .32 | .35 | |||||||||||||||
Total loans |
.40 | .42 | .38 | .30 | .35 | |||||||||||||||
|
||||||||||||||||||||
ASSET QUALITY (a) | ||||||||||||||||||||
($ in millions) | ||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | ||||||||||||||||
2023 | 2023 | 2022 | 2022 | 2022 | ||||||||||||||||
Nonperforming loans |
||||||||||||||||||||
Commercial |
$ | 204 | $ | 150 | $ | 139 | $ | 92 | $ | 116 | ||||||||||
Lease financing |
27 | 28 | 30 | 30 | 32 | |||||||||||||||
Total commercial |
231 | 178 | 169 | 122 | 148 | |||||||||||||||
Commercial mortgages |
361 | 432 | 251 | 110 | 147 | |||||||||||||||
Construction and development |
113 | 103 | 87 | 57 | 59 | |||||||||||||||
Total commercial real estate |
474 | 535 | 338 | 167 | 206 | |||||||||||||||
Residential mortgages |
207 | 292 | 325 | 211 | 223 | |||||||||||||||
Credit card |
-- | 1 | 1 | -- | -- | |||||||||||||||
Other retail |
129 | 133 | 139 | 130 | 148 | |||||||||||||||
Total nonperforming loans |
1,041 | 1,139 | 972 | 630 | 725 | |||||||||||||||
Other real estate |
25 | 23 | 23 | 24 | 23 | |||||||||||||||
Other nonperforming assets |
19 | 19 | 21 | 23 | 22 | |||||||||||||||
Total nonperforming assets |
$ | 1,085 | $ | 1,181 | $ | 1,016 | $ | 677 | $ | 770 | ||||||||||
Accruing loans 90 days or more past due |
$ | 474 | $ | 494 | $ | 491 | $ | 393 | $ | 423 | ||||||||||
Nonperforming assets to loans plus ORE (%) |
.29 | .30 | .26 | .20 | .23 | |||||||||||||||
(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due |
| |||||||||||||||||||
11
|
U.S. Bancorp Second Quarter 2023 Results | |
COMMON SHARES | ||||||||||||||||||||
(Millions) | 2Q 2023 |
1Q 2023 |
4Q 2022 |
3Q 2022 |
2Q 2022 |
|||||||||||||||
Beginning shares outstanding |
1,533 | 1,531 | 1,486 | 1,486 | 1,486 | |||||||||||||||
Shares issued for stock incentive plans, acquisitions and other corporate purposes |
-- | 3 | 45 | -- | -- | |||||||||||||||
Shares repurchased |
-- | (1 | ) | -- | -- | -- | ||||||||||||||
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Ending shares outstanding |
1,533 | 1,533 | 1,531 | 1,486 | 1,486 | |||||||||||||||
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CAPITAL POSITION | Preliminary Data | |||||||||||||||||||
($ in millions) | Jun 30 2023 |
Mar 31 2023 |
Dec 31 2022 |
Sep 30 2022 |
Jun 30 2022 |
|||||||||||||||
Total U.S. Bancorp shareholders’ equity |
$ | 53,019 | $ | 52,989 | $ | 50,766 | $ | 47,513 | $ | 48,605 | ||||||||||
Basel III Standardized Approach (a) |
||||||||||||||||||||
Common equity tier 1 capital |
$ | 42,944 | $ | 42,027 | $ | 41,560 | $ | 44,094 | $ | 42,944 | ||||||||||
Tier 1 capital |
50,187 | 49,278 | 48,813 | 51,346 | 50,195 | |||||||||||||||
Total risk-based capital |
60,334 | 59,920 | 59,015 | 60,738 | 58,307 | |||||||||||||||
Common equity tier 1 capital ratio |
9.1 | % | 8.5 | % | 8.4 | % | 9.7 | % | 9.7 | % | ||||||||||
Tier 1 capital ratio |
10.6 | 10.0 | 9.8 | 11.2 | 11.4 | |||||||||||||||
Total risk-based capital ratio |
12.7 | 12.1 | 11.9 | 13.3 | 13.2 | |||||||||||||||
Leverage ratio |
7.5 | 7.5 | 7.9 | 8.7 | 8.6 | |||||||||||||||
Tangible common equity to tangible assets (b) |
4.8 | 4.8 | 4.5 | 5.2 | 5.5 | |||||||||||||||
Tangible common equity to risk-weighted assets (b) |
6.8 | 6.5 | 6.0 | 6.7 | 7.2 | |||||||||||||||
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b) |
8.9 | 8.3 | 8.1 | 9.4 | 9.4 | |||||||||||||||
(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 18 |
Total U.S. Bancorp shareholders’ equity was $53.0 billion at June 30, 2023, and at March 31, 2023, compared with $48.6 billion at June 30, 2022. The Company suspended all common stock repurchases at the beginning of the third quarter of 2021, except for those done exclusively in connection with its stock-based compensation programs, due to its pending acquisition of MUB’s core regional banking franchise. The Company will evaluate potential repurchases in connection with the potential capital requirements given the regulatory landscape.
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 9.1 percent at June 30, 2023, compared with 8.5 percent at March 31, 2023, and 9.7 percent at June 30, 2022. The common equity tier 1 capital to risk-weighted assets ratio, reflecting the full implementation of the current expected credit losses methodology was 8.9 percent at June 30, 2023, compared with 8.3 percent at March 31, 2023, and 9.4 percent at June 30, 2022.
12
|
U.S. Bancorp Second Quarter 2023 Results | |
Investor Conference Call |
On Wednesday, July 19, 2023 at 9 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 live conference call will be available online or by telephone. To access the webcast and presentation, visit the U.S. Bancorp 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 877-692-8955. Participants calling from outside the United States and Canada, please dial 234-720-6979. The access code for all participants is 6030554. For those unable to participate during the live call, a replay will be available at approximately 12 p.m. CT on Wednesday, July 19, 2023. To access the replay, please visit the U.S. Bancorp website at usbank.com and click on “About Us”, “Investor Relations” and “Webcasts & Presentations.”
About U.S. Bancorp |
U.S. Bancorp, with approximately 77,000 employees and $681 billion in assets as of June 30, 2023, is the parent company of U.S. Bank National Association. The Minneapolis-based company serves millions of customers locally, nationally and globally through a diversified mix of businesses: Consumer and Business Banking; Payment Services; Corporate & Commercial Banking; and Wealth Management and Investment Services. Union Bank, consisting primarily of retail banking branches on the West Coast, joined U.S. Bancorp in 2022. U.S. Bancorp has been recognized for its approach to digital innovation, social responsibility, and customer service, including being named one of the 2023 World’s Most Ethical Companies and Fortune’s most admired superregional bank. To learn more, please visit the U.S. Bancorp website at usbank.com and click on “About Us”.
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, future economic conditions and the anticipated future revenue, expenses, financial condition, asset quality, capital and liquidity levels, plans, prospects and operations of U.S. Bancorp. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “hopes,” “estimates,” “projects,” “forecasts,” “intends,” “plans,” “goals,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.”
Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those set forth in forward-looking statements, including the following risks and uncertainties:
• | Deterioration in general business and economic conditions or turbulence in domestic or global financial markets, which 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; |
• | Turmoil and volatility in the financial services industry, including failures or rumors of failures of other depository institutions, which could affect the ability of depository institutions, including U.S. Bank National Association, to attract and retain depositors, and could affect the ability of financial services providers, including U.S. Bancorp, to borrow or raise capital; |
• | Increases in Federal Deposit Insurance Corporation (“FDIC”) assessments due to bank failures; |
• | Actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions; |
• | Changes to regulatory capital, liquidity and resolution-related requirements applicable to large banking organizations in response to recent developments affecting the banking sector; |
• | Changes to statutes, regulations, or regulatory policies or practices, including capital and liquidity requirements, and the enforcement and interpretation of such laws and regulations, and U.S. Bancorp’s ability to address or satisfy those requirements and other requirements or conditions imposed by regulatory entities; |
• | Changes in interest rates; |
• | Increases in unemployment rates; |
• | Deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; |
• | Risks related to originating and selling mortgages, including repurchase and indemnity demands, and related to U.S. Bancorp’s role as a loan servicer; |
• | Impacts of current, pending or future litigation and governmental proceedings; |
13
|
U.S. Bancorp Second Quarter 2023 Results | |
• | Increased competition from both banks and non-banks; |
• | Effects of climate change and related physical and transition risks; |
• | Changes in customer behavior and preferences and the ability to implement technological changes to respond to customer needs and meet competitive demands; |
• | Breaches in data security; |
• | Failures or disruptions in or breaches of U.S. Bancorp’s operational, technology or security systems or infrastructure, or those of third parties; |
• | Failures to safeguard personal information; |
• | Impacts of pandemics, including the COVID-19 pandemic, natural disasters, terrorist activities, civil unrest, international hostilities and geopolitical events; |
• | Impacts of supply chain disruptions, rising inflation, slower growth or a recession; |
• | Failure to execute on strategic or operational plans; |
• | Effects of mergers and acquisitions and related integration; |
• | Effects of critical accounting policies and judgments; |
• | Effects of changes in or interpretations of tax laws and regulations; |
• | Management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputation risk; and |
• | The risks and uncertainties more fully discussed in the section entitled “Risk Factors” of U.S. Bancorp’s Form 10-K for the year ended December 31, 2022, and subsequent filings with the Securities and Exchange Commission. |
In addition, U.S. Bancorp’s acquisition of MUB presents risks and uncertainties, including, among others: the risk that the cost savings, any revenue synergies and other anticipated benefits of the acquisition may not be realized or may take longer than anticipated to be realized; and the possibility that the combination of MUB with U.S. Bancorp, including the integration of MUB, may be more costly or difficult to complete than anticipated or have unanticipated adverse results.
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. Readers are cautioned not to place undue reliance on any forward-looking statements. 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.
14
|
U.S. Bancorp Second Quarter 2023 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.
The adjusted return on average assets, adjusted return on average common equity, adjusted net income and adjusted diluted earnings per common share exclude notable items related to the acquisition of MUB. Management uses these measures in their analysis of the Company’s performance and believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods.
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.
15
|
CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||||
(Dollars and Shares in Millions, Except Per Share Data) | Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(Unaudited) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Interest Income |
||||||||||||||||
Loans |
$5,605 | $2,869 | $10,882 | $5,468 | ||||||||||||
Loans held for sale |
38 | 54 | 69 | 114 | ||||||||||||
Investment securities |
1,077 | 806 | 2,151 | 1,523 | ||||||||||||
Other interest income |
806 | 96 | 1,388 | 138 | ||||||||||||
Total interest income |
7,526 | 3,825 | 14,490 | 7,243 | ||||||||||||
Interest Expense |
||||||||||||||||
Deposits |
1,939 | 177 | 3,444 | 257 | ||||||||||||
Short-term borrowings |
740 | 57 | 1,189 | 78 | ||||||||||||
Long-term debt |
432 | 156 | 808 | 300 | ||||||||||||
Total interest expense |
3,111 | 390 | 5,441 | 635 | ||||||||||||
Net interest income |
4,415 | 3,435 | 9,049 | 6,608 | ||||||||||||
Provision for credit losses |
821 | 311 | 1,248 | 423 | ||||||||||||
Net interest income after provision for credit losses |
3,594 | 3,124 | 7,801 | 6,185 | ||||||||||||
Noninterest Income |
||||||||||||||||
Card revenue |
422 | 399 | 782 | 737 | ||||||||||||
Corporate payment products revenue |
190 | 172 | 379 | 330 | ||||||||||||
Merchant processing services |
436 | 425 | 823 | 788 | ||||||||||||
Trust and investment management fees |
621 | 566 | 1,211 | 1,066 | ||||||||||||
Service charges |
324 | 334 | 648 | 667 | ||||||||||||
Commercial products revenue |
358 | 290 | 692 | 556 | ||||||||||||
Mortgage banking revenue |
131 | 142 | 259 | 342 | ||||||||||||
Investment products fees |
68 | 59 | 136 | 121 | ||||||||||||
Securities gains (losses), net |
3 | 19 | (29 | ) | 37 | |||||||||||
Other |
173 | 142 | 332 | 300 | ||||||||||||
Total noninterest income |
2,726 | 2,548 | 5,233 | 4,944 | ||||||||||||
Noninterest Expense |
||||||||||||||||
Compensation and employee benefits |
2,646 | 2,246 | 5,292 | 4,495 | ||||||||||||
Net occupancy and equipment |
316 | 265 | 637 | 534 | ||||||||||||
Professional services |
141 | 111 | 275 | 225 | ||||||||||||
Marketing and business development |
122 | 106 | 244 | 186 | ||||||||||||
Technology and communications |
522 | 419 | 1,025 | 840 | ||||||||||||
Other intangibles |
159 | 40 | 319 | 87 | ||||||||||||
Merger and integration charges |
310 | 197 | 554 | 197 | ||||||||||||
Other |
353 | 340 | 778 | 662 | ||||||||||||
Total noninterest expense |
4,569 | 3,724 | 9,124 | 7,226 | ||||||||||||
Income before income taxes |
1,751 | 1,948 | 3,910 | 3,903 | ||||||||||||
Applicable income taxes |
382 | 414 | 837 | 811 | ||||||||||||
Net income |
1,369 | 1,534 | 3,073 | 3,092 | ||||||||||||
Net (income) loss attributable to noncontrolling interests |
(8 | ) | (3 | ) | (14 | ) | (4 | ) | ||||||||
Net income attributable to U.S. Bancorp |
$1,361 | $1,531 | $3,059 | $3,088 | ||||||||||||
Net income applicable to U.S. Bancorp common shareholders |
$1,281 | $1,464 | $2,873 | $2,930 | ||||||||||||
Earnings per common share |
$.84 | $.99 | $1.87 | $1.97 | ||||||||||||
Diluted earnings per common share |
$.84 | $.99 | $1.87 | $1.97 | ||||||||||||
Dividends declared per common share |
$.48 | $.46 | $.96 | $.92 | ||||||||||||
Average common shares outstanding |
1,533 | 1,486 | 1,532 | 1,485 | ||||||||||||
Average diluted common shares outstanding |
1,533 | 1,487 | 1,533 | 1,486 |
16
|
CONSOLIDATED ENDING BALANCE SHEET | ||||||||||||
(Dollars in Millions) | June 30, 2023 |
December 31, 2022 |
June 30, 2022 |
|||||||||
Assets |
(Unaudited | ) | (Unaudited | ) | ||||||||
Cash and due from banks |
$70,642 | $53,542 | $39,124 | |||||||||
Investment securities |
||||||||||||
Held-to-maturity |
86,938 | 88,740 | 61,503 | |||||||||
Available-for-sale |
69,221 | 72,910 | 98,806 | |||||||||
Loans held for sale |
2,361 | 2,200 | 3,943 | |||||||||
Loans |
||||||||||||
Commercial |
136,775 | 135,690 | 125,983 | |||||||||
Commercial real estate |
54,357 | 55,487 | 39,753 | |||||||||
Residential mortgages |
114,449 | 115,845 | 82,114 | |||||||||
Credit card |
26,626 | 26,295 | 23,697 | |||||||||
Other retail |
47,221 | 54,896 | 60,822 | |||||||||
Total loans |
379,428 | 388,213 | 332,369 | |||||||||
Less allowance for loan losses |
(7,164 | ) | (6,936 | ) | (5,832 | ) | ||||||
Net loans |
372,264 | 381,277 | 326,537 | |||||||||
Premises and equipment |
3,695 | 3,858 | 3,177 | |||||||||
Goodwill |
12,486 | 12,373 | 10,157 | |||||||||
Other intangible assets |
6,634 | 7,155 | 4,487 | |||||||||
Other assets |
56,584 | 52,750 | 43,647 | |||||||||
Total assets |
$680,825 | $674,805 | $591,381 | |||||||||
Liabilities and Shareholders’ Equity |
||||||||||||
Deposits |
||||||||||||
Noninterest-bearing |
$104,996 | $137,743 | $129,130 | |||||||||
Interest-bearing |
416,604 | 387,233 | 337,972 | |||||||||
Total deposits |
521,600 | 524,976 | 467,102 | |||||||||
Short-term borrowings |
32,334 | 31,216 | 24,963 | |||||||||
Long-term debt |
45,283 | 39,829 | 29,408 | |||||||||
Other liabilities |
28,124 | 27,552 | 20,839 | |||||||||
Total liabilities |
627,341 | 623,573 | 542,312 | |||||||||
Shareholders’ equity |
||||||||||||
Preferred stock |
6,808 | 6,808 | 6,808 | |||||||||
Common stock |
21 | 21 | 21 | |||||||||
Capital surplus |
8,742 | 8,712 | 8,555 | |||||||||
Retained earnings |
73,355 | 71,901 | 70,772 | |||||||||
Less treasury stock |
(25,189 | ) | (25,269 | ) | (27,190 | ) | ||||||
Accumulated other comprehensive income (loss) |
(10,718 | ) | (11,407 | ) | (10,361 | ) | ||||||
Total U.S. Bancorp shareholders’ equity |
53,019 | 50,766 | 48,605 | |||||||||
Noncontrolling interests |
465 | 466 | 464 | |||||||||
Total equity |
53,484 | 51,232 | 49,069 | |||||||||
Total liabilities and equity |
$680,825 | $674,805 | $591,381 |
17
|
NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||
(Dollars in Millions, Unaudited) | June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
|||||||||||||||
Total equity |
$53,484 | $53,454 | $51,232 | $47,978 | $49,069 | |||||||||||||||
Preferred stock |
(6,808 | ) | (6,808 | ) | (6,808 | ) | (6,808 | ) | (6,808 | ) | ||||||||||
Noncontrolling interests |
(465 | ) | (465 | ) | (466 | ) | (465 | ) | (464 | ) | ||||||||||
Goodwill (net of deferred tax liability) (1) |
(11,493 | ) | (11,575 | ) | (11,395 | ) | (9,165 | ) | (9,204 | ) | ||||||||||
Intangible assets (net of deferred tax liability), other than mortgage servicing rights |
(2,490 | ) | (2,611 | ) | (2,792 | ) | (735 | ) | (780 | ) | ||||||||||
Tangible common equity (a) |
32,228 | 31,995 | 29,771 | 30,805 | 31,813 | |||||||||||||||
Common equity tier 1 capital, determined in accordance with transitional regulatory capital requirements related to the current expected credit losses methodology implementation |
42,944 | 42,027 | 41,560 | 44,094 | 42,944 | |||||||||||||||
Adjustments (2) |
(866 | ) | (866 | ) | (1,299 | ) | (1,300 | ) | (1,300 | ) | ||||||||||
Common equity tier 1 capital, reflecting the full implementation of the current expected credit losses methodology (b) |
42,078 | 41,161 | 40,261 | 42,794 | 41,644 | |||||||||||||||
Total assets |
680,825 | 682,377 | 674,805 | 600,973 | 591,381 | |||||||||||||||
Goodwill (net of deferred tax liability) (1) |
(11,493 | ) | (11,575 | ) | (11,395 | ) | (9,165 | ) | (9,204 | ) | ||||||||||
Intangible assets (net of deferred tax liability), other than mortgage servicing rights |
(2,490 | ) | (2,611 | ) | (2,792 | ) | (735 | ) | (780 | ) | ||||||||||
Tangible assets (c) |
666,842 | 668,191 | 660,618 | 591,073 | 581,397 | |||||||||||||||
Risk-weighted assets, determined in accordance with transitional regulatory capital requirements related to the current expected credit losses methodology implementation (d) |
473,393 | * | 494,048 | 496,500 | 456,928 | 441,804 | ||||||||||||||
Adjustments (3) |
(735 | )* | (735 | ) | (620 | ) | (337 | ) | (317 | ) | ||||||||||
Risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (e) |
472,658 | * | 493,313 | 495,880 | 456,591 | 441,487 | ||||||||||||||
Ratios* |
||||||||||||||||||||
Tangible common equity to tangible assets (a)/(c) |
4.8 | % | 4.8 | % | 4.5 | % | 5.2 | % | 5.5 | % | ||||||||||
Tangible common equity to risk-weighted assets (a)/(d) |
6.8 | 6.5 | 6.0 | 6.7 | 7.2 | |||||||||||||||
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)/(e) |
8.9 | 8.3 | 8.1 | 9.4 | 9.4 | |||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
||||||||||||||||
Net income applicable to U.S. Bancorp common shareholders |
$1,281 | $1,592 | $853 | $1,718 | $1,464 | |||||||||||||||
Intangibles amortization (net-of-tax) |
126 | 126 | 67 | 34 | 32 | |||||||||||||||
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization |
1,407 | 1,718 | 920 | 1,752 | 1,496 | |||||||||||||||
Annualized net income applicable to U.S. Bancorp common shareholders, excluding intangible amortization (f) |
5,643 | 6,967 | 3,650 | 6,951 | 6,000 | |||||||||||||||
Average total equity |
54,287 | 53,132 | 49,731 | 50,284 | 49,633 | |||||||||||||||
Average preferred stock |
(6,808 | ) | (6,808 | ) | (6,808 | ) | (6,808 | ) | (6,808 | ) | ||||||||||
Average noncontrolling interests |
(465 | ) | (465 | ) | (466 | ) | (464 | ) | (467 | ) | ||||||||||
Average goodwill (net of deferred tax liability) (1) |
(11,527 | ) | (11,444 | ) | (9,202 | ) | (9,192 | ) | (9,246 | ) | ||||||||||
Average intangible assets (net of deferred tax liability), other than mortgage servicing rights |
(2,530 | ) | (2,681 | ) | (1,637 | ) | (758 | ) | (783 | ) | ||||||||||
Average tangible common equity (g) |
32,957 | 31,734 | 31,618 | 33,062 | 32,329 | |||||||||||||||
Return on tangible common equity (f)/(g) |
17.1 | % | 22.0 | % | 11.5 | % | 21.0 | % | 18.6 | % | ||||||||||
Net interest income |
$4,415 | $4,634 | $4,293 | $3,827 | $3,435 | |||||||||||||||
Taxable-equivalent adjustment (4) |
34 | 34 | 32 | 30 | 29 | |||||||||||||||
Net interest income, on a taxable-equivalent basis |
4,449 | 4,668 | 4,325 | 3,857 | 3,464 | |||||||||||||||
Net interest income, on a taxable-equivalent basis |
||||||||||||||||||||
(as calculated above) |
4,449 | 4,668 | 4,325 | 3,857 | 3,464 | |||||||||||||||
Noninterest income |
2,726 | 2,507 | 2,043 | 2,469 | 2,548 | |||||||||||||||
Less: Securities gains (losses), net |
3 | (32 | ) | (18 | ) | 1 | 19 | |||||||||||||
Total net revenue, excluding net securities gains (losses) (h) |
7,172 | 7,207 | 6,386 | 6,325 | 5,993 | |||||||||||||||
Noninterest expense (i) |
4,569 | 4,555 | 4,043 | 3,637 | 3,724 | |||||||||||||||
Less: Intangible amortization |
159 | 160 | 85 | 43 | 40 | |||||||||||||||
Noninterest expense, excluding intangible amortization (j) |
4,410 | 4,395 | 3,958 | 3,594 | 3,684 | |||||||||||||||
Efficiency ratio (i)/(h) |
63.7 | % | 63.2 | % | 63.3 | % | 57.5 | % | 62.1 | % | ||||||||||
Tangible efficiency ratio (j)/(h) |
61.5 | 61.0 | 62.0 | 56.8 | 61.5 |
* | Preliminary data. Subject to change prior to filings with applicable regulatory agencies. |
(1) | Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements. |
(2) | Includes the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology net of deferred taxes. |
(3) | Includes the impact of the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology. |
(4) | Based on a federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes. |
18
|
NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
(Dollars and Shares in Millions, Except Per Share Data, Unaudited) | June 30, 2023 |
March 31, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|||||||||||||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 1,281 | $ | 1,592 | $ | 1,464 | $ | 2,873 | $ | 2,930 | ||||||||||
Less: Notable items, including the impact of earnings allocated to participating stock awards (1), (2) |
(429 | ) | (181 | ) | (153 | ) | (610 | ) | (153 | ) | ||||||||||
Net income applicable to U.S. Bancorp common shareholders, excluding notable items (a) |
1,710 | 1,773 | 1,617 | 3,483 | 3,083 | |||||||||||||||
Average diluted common shares outstanding (b) |
1,533 | 1,532 | 1,487 | 1,533 | 1,486 | |||||||||||||||
Diluted earnings per common share, excluding notable items (a)/(b) |
$ | 1.12 | $ | 1.16 | $ | 1.09 | $ | 2.27 | $ | 2.07 | ||||||||||
Net income attributable to U.S. Bancorp |
$ | 1,361 | ||||||||||||||||||
Less: Notable items (1) |
(432 | ) | ||||||||||||||||||
Net income attributable to U.S. Bancorp, excluding notable items |
1,793 | |||||||||||||||||||
Annualized net income attributable to U.S. Bancorp, excluding notable items (c) |
7,192 | |||||||||||||||||||
Average assets (d) |
673,012 | |||||||||||||||||||
Return on average assets, excluding notable items (c)/(d) |
1.07 | % | ||||||||||||||||||
Net income applicable to U.S. Bancorp common shareholders, excluding notable items (as calculated above) |
$ | 1,710 | ||||||||||||||||||
Annualized net income applicable to U.S. Bancorp common shareholders, excluding notable items (e) |
6,859 | |||||||||||||||||||
Average common equity (f) |
47,014 | |||||||||||||||||||
Return on average common equity, excluding notable items (e)/(f) |
14.6 | % | ||||||||||||||||||
Net interest income |
$ | 4,415 | ||||||||||||||||||
Taxable-equivalent adjustment (3) |
34 | |||||||||||||||||||
Net interest income, on a taxable-equivalent basis |
4,449 | |||||||||||||||||||
Net interest income, on a taxable-equivalent basis (as calculated above) |
4,449 | |||||||||||||||||||
Noninterest income |
2,726 | |||||||||||||||||||
Less: Securities gains (losses), net |
3 | |||||||||||||||||||
Total net revenue, excluding net securities gains (losses) |
7,172 | |||||||||||||||||||
Less: Notable items (1) |
(22 | ) | ||||||||||||||||||
Total net revenue, excluding net securities gains (losses) and notable items (g) |
7,194 | |||||||||||||||||||
Noninterest expense |
4,569 | |||||||||||||||||||
Less: Notable items (1) |
310 | |||||||||||||||||||
Noninterest expense, excluding notable items (h) |
4,259 | |||||||||||||||||||
Efficiency ratio, excluding notable items (h)/(g) |
59.2 | % | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
||||||||||||||||||
Net charge-offs |
$ | 649 | $ | 373 | $ | 578 | ||||||||||||||
Less: Notable items (4) |
309 | 91 | 368 | |||||||||||||||||
Net charge-offs, excluding notable items |
340 | 282 | 210 | |||||||||||||||||
Annualized net charge-offs, excluding notable items (i) |
1,364 | 1,144 | 833 | |||||||||||||||||
Average loan balances (j) |
388,817 | 386,750 | 359,811 | |||||||||||||||||
Net charge-off ratio, excluding notable items (i)/(j) |
.35 | % | .30 | % | .23 | % |
(1) | Notable items of $575 million ($432 million net-of-tax) for the three months ended June 30, 2023 included $(22) million of noninterest income related to balance sheet repositioning and capital management actions, $310 million of merger and integration-related charges and $243 million of provision for credit losses related to balance sheet repositioning and capital management actions. Notable items for the three months ended March 31, 2023 included $244 million ($183 million net-of-tax) of merger and integration-related charges. Notable items for the three months ended June 30, 2022 included $197 million ($153 million net-of-tax) of merger and integration-related charges. |
(2) | Notable items of $819 million ($615 million net-of-tax) for the six months ended June 30, 2023 included $(22) million of noninterest income related to balance sheet repositioning and capital management actions, $554 million of merger and integration-related charges and $243 million of provision for credit losses related to balance sheet repositioning and capital management actions. Notable items for the six months ended June 30, 2022 included $197 million ($153 million net-of-tax) of merger and integration-related charges. |
(3) | Based on a federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes. |
(4) | Notable items for the three months ended June 30, 2023 included $309 million of net charge-offs related to balance sheet repositioning and capital management actions. Notable items for the three months ended March 31, 2023 included $91 million of net charge-offs related to uncollectible acquired loans, considered purchase credit deteriorated as of the date of the acquisition. Notable items for the three months ended December 31, 2022 included $179 million of net charge-offs related to uncollectible MUB acquired loans as well as $189 million of net charge-offs related to balance sheet repositioning and capital management actions. |
19
|
||
LINE OF BUSINESS FINANCIAL PERFORMANCE | Preliminary data | |||||||||||||||||||||||||||||||
($ in millions) | Net Income Attributable to U.S. Bancorp |
Percent Change | Net Income Attributable to U.S. Bancorp |
|||||||||||||||||||||||||||||
Business Line | 2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
||||||||||||||||||||||||
Corporate and Commercial Banking |
$ | 435 | $ | 607 | $ | 376 | (28.3 | ) | 15.7 | $ | 1,042 | $ | 784 | 32.9 | ||||||||||||||||||
Consumer and Business Banking |
598 | 680 | 483 | (12.1 | ) | 23.8 | 1,278 | 846 | 51.1 | |||||||||||||||||||||||
Wealth Management and Investment Services |
403 | 417 | 365 | (3.4 | ) | 10.4 | 820 | 609 | 34.6 | |||||||||||||||||||||||
Payment Services |
350 | 343 | 394 | 2.0 | (11.2 | ) | 693 | 771 | (10.1 | ) | ||||||||||||||||||||||
Treasury and Corporate Support |
(425 | ) | (349 | ) | (87 | ) | (21.8 | ) | nm | (774 | ) | 78 | nm | |||||||||||||||||||
Consolidated Company |
$ | 1,361 | $ | 1,698 | $ | 1,531 | (19.8 | ) | (11.1 | ) | $ | 3,059 | $ | 3,088 | (.9 | ) | ||||||||||||||||
Income Before Provision and Taxes |
Percent Change | Income Before Provision and Taxes |
||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
|||||||||||||||||||||||||
Corporate and Commercial Banking |
$ | 730 | $ | 786 | $ | 600 | (7.1 | ) | 21.7 | $ | 1,516 | $ | 1,150 | 31.8 | ||||||||||||||||||
Consumer and Business Banking |
821 | 914 | 569 | (10.2 | ) | 44.3 | 1,735 | 1,100 | 57.7 | |||||||||||||||||||||||
Wealth Management and Investment Services |
540 | 553 | 483 | (2.4 | ) | 11.8 | 1,093 | 817 | 33.8 | |||||||||||||||||||||||
Payment Services |
781 | 678 | 747 | 15.2 | 4.6 | 1,459 | 1,380 | 5.7 | ||||||||||||||||||||||||
Treasury and Corporate Support |
(266 | ) | (311 | ) | (111 | ) | 14.5 | nm | (577 | ) | (65 | ) | nm | |||||||||||||||||||
Consolidated Company |
$ | 2,606 | $ | 2,620 | $ | 2,288 | (.5 | ) | 13.9 | $ | 5,226 | $ | 4,382 | 19.3 | ||||||||||||||||||
Lines of Business
The Company’s major lines of business are Corporate and Commercial Banking, Consumer and Business Banking, Wealth Management and Investment Services, Payment Services, and Treasury and Corporate Support. 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. Business line 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. 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 2023, certain organization and methodology changes were made and, accordingly, prior period results were restated and presented on a comparable basis.
2
|
||
CORPORATE AND COMMERCIAL BANKING | Preliminary data |
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
|||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 1,019 | $ | 1,080 | $ | 799 | (5.6 | ) | 27.5 | $ | 2,099 | $ | 1,546 | 35.8 | ||||||||||||||||||
Noninterest income |
347 | 319 | 272 | 8.8 | 27.6 | 666 | 519 | 28.3 | ||||||||||||||||||||||||
Securities gains (losses), net |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Total net revenue |
1,366 | 1,399 | 1,071 | (2.4 | ) | 27.5 | 2,765 | 2,065 | 33.9 | |||||||||||||||||||||||
Noninterest expense |
609 | 587 | 471 | 3.7 | 29.3 | 1,196 | 915 | 30.7 | ||||||||||||||||||||||||
Other intangibles |
27 | 26 | -- | 3.8 | nm | 53 | -- | nm | ||||||||||||||||||||||||
Total noninterest expense |
636 | 613 | 471 | 3.8 | 35.0 | 1,249 | 915 | 36.5 | ||||||||||||||||||||||||
Income before provision and taxes |
730 | 786 | 600 | (7.1 | ) | 21.7 | 1,516 | 1,150 | 31.8 | |||||||||||||||||||||||
Provision for credit losses |
150 | (24 | ) | 98 | nm | 53.1 | 126 | 104 | 21.2 | |||||||||||||||||||||||
Income before income taxes |
580 | 810 | 502 | (28.4 | ) | 15.5 | 1,390 | 1,046 | 32.9 | |||||||||||||||||||||||
Income taxes and |
||||||||||||||||||||||||||||||||
taxable-equivalent adjustment |
145 | 203 | 126 | (28.6 | ) | 15.1 | 348 | 262 | 32.8 | |||||||||||||||||||||||
Net income |
435 | 607 | 376 | (28.3 | ) | 15.7 | 1,042 | 784 | 32.9 | |||||||||||||||||||||||
Net (income) loss attributable to |
||||||||||||||||||||||||||||||||
noncontrolling interests |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 435 | $ | 607 | $ | 376 | (28.3 | ) | 15.7 | $ | 1,042 | $ | 784 | 32.9 | ||||||||||||||||||
Average Balance Sheet Data |
||||||||||||||||||||||||||||||||
Loans |
$ | 151,123 | $ | 149,776 | $ | 123,245 | .9 | 22.6 | $ | 150,455 | $ | 119,598 | 25.8 | |||||||||||||||||||
Other earning assets |
6,250 | 5,644 | 4,161 | 10.7 | 50.2 | 5,949 | 4,417 | 34.7 | ||||||||||||||||||||||||
Goodwill |
2,859 | 2,825 | 1,912 | 1.2 | 49.5 | 2,842 | 1,912 | 48.6 | ||||||||||||||||||||||||
Other intangible assets |
537 | 592 | 4 | (9.3 | ) | nm | 564 | 4 | nm | |||||||||||||||||||||||
Assets |
173,101 | 169,654 | 137,809 | 2.0 | 25.6 | 171,389 | 132,899 | 29.0 | ||||||||||||||||||||||||
Noninterest-bearing deposits |
51,242 | 58,413 | 59,226 | (12.3 | ) | (13.5 | ) | 54,808 | 61,195 | (10.4 | ) | |||||||||||||||||||||
Interest-bearing deposits |
107,724 | 104,912 | 93,830 | 2.7 | 14.8 | 106,326 | 90,509 | 17.5 | ||||||||||||||||||||||||
Total deposits |
158,966 | 163,325 | 153,056 | (2.7 | ) | 3.9 | 161,134 | 151,704 | 6.2 | |||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
18,244 | 17,302 | 13,992 | 5.4 | 30.4 | 17,776 | 13,862 | 28.2 |
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.
Corporate and Commercial Banking generated $730 million of income before provision and taxes in the second quarter of 2023, compared with $600 million in the second quarter of 2022, and contributed $435 million of the Company’s net income in the second quarter of 2023. The provision for credit losses increased $52 million (53.1 percent) compared with the second quarter of 2022 primarily due to credit downgrades in commercial real estate and select commercial portfolios in the current quarter. Total net revenue was $295 million (27.5 percent) higher in the second quarter of 2023 due to an increase of $220 million (27.5 percent) in net interest income, and an increase of $75 million (27.6 percent) in total noninterest income. Net interest income increased due to the impact of rising interest rates on earning assets and the acquisition of MUB. Total noninterest income increased primarily due to the MUB acquisition and higher commercial products revenue mainly due to higher trading revenue. Total noninterest expense increased $165 million (35.0 percent) compared with the second quarter of 2022 primarily due to higher FDIC insurance expense driven by an increase in the assessment base and rate along with the inclusion of MUB in the current year, and higher net shared services expense driven by investment in support of business growth and the impact of the MUB acquisition, including intangible amortization driven by the core deposit intangible.
3
|
||
CONSUMER AND BUSINESS BANKING | Preliminary data |
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
|||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 2,196 | $ | 2,284 | $ | 1,580 | (3.9 | ) | 39.0 | $ | 4,480 | $ | 3,063 | 46.3 | ||||||||||||||||||
Noninterest income |
426 | 397 | 390 | 7.3 | 9.2 | 823 | 844 | (2.5 | ) | |||||||||||||||||||||||
Securities gains (losses), net |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Total net revenue |
2,622 | 2,681 | 1,970 | (2.2 | ) | 33.1 | 5,303 | 3,907 | 35.7 | |||||||||||||||||||||||
Noninterest expense |
1,714 | 1,679 | 1,398 | 2.1 | 22.6 | 3,393 | 2,801 | 21.1 | ||||||||||||||||||||||||
Other intangibles |
87 | 88 | 3 | (1.1 | ) | nm | 175 | 6 | nm | |||||||||||||||||||||||
Total noninterest expense |
1,801 | 1,767 | 1,401 | 1.9 | 28.6 | 3,568 | 2,807 | 27.1 | ||||||||||||||||||||||||
Income before provision and taxes |
821 | 914 | 569 | (10.2 | ) | 44.3 | 1,735 | 1,100 | 57.7 | |||||||||||||||||||||||
Provision for credit losses |
24 | 7 | (74 | ) | nm | nm | 31 | (26 | ) | nm | ||||||||||||||||||||||
Income before income taxes |
797 | 907 | 643 | (12.1 | ) | 24.0 | 1,704 | 1,126 | 51.3 | |||||||||||||||||||||||
Income taxes and taxable-equivalent adjustment |
199 | 227 | 160 | (12.3 | ) | 24.4 | 426 | 280 | 52.1 | |||||||||||||||||||||||
Net income |
598 | 680 | 483 | (12.1 | ) | 23.8 | 1,278 | 846 | 51.1 | |||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 598 | $ | 680 | $ | 483 | (12.1 | ) | 23.8 | $ | 1,278 | $ | 846 | 51.1 | ||||||||||||||||||
Average Balance Sheet Data |
||||||||||||||||||||||||||||||||
Loans |
$ | 169,704 | $ | 170,097 | $ | 140,747 | (.2 | ) | 20.6 | $ | 169,898 | $ | 140,586 | 20.8 | ||||||||||||||||||
Other earning assets |
2,512 | 2,179 | 2,576 | 15.3 | (2.5 | ) | 2,346 | 3,475 | (32.5 | ) | ||||||||||||||||||||||
Goodwill |
4,531 | 4,490 | 3,244 | .9 | 39.7 | 4,511 | 3,253 | 38.7 | ||||||||||||||||||||||||
Other intangible assets |
5,393 | 5,594 | 3,635 | (3.6 | ) | 48.4 | 5,493 | 3,406 | 61.3 | |||||||||||||||||||||||
Assets |
187,507 | 187,928 | 155,700 | (.2 | ) | 20.4 | 187,715 | 156,320 | 20.1 | |||||||||||||||||||||||
Noninterest-bearing deposits |
35,489 | 43,216 | 30,492 | (17.9 | ) | 16.4 | 39,331 | 30,721 | 28.0 | |||||||||||||||||||||||
Interest-bearing deposits |
187,793 | 181,439 | 164,269 | 3.5 | 14.3 | 184,632 | 163,123 | 13.2 | ||||||||||||||||||||||||
Total deposits |
223,282 | 224,655 | 194,761 | (.6 | ) | 14.6 | 223,963 | 193,844 | 15.5 | |||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
16,516 | 16,702 | 12,326 | (1.1 | ) | 34.0 | 16,608 | 12,270 | 35.4 |
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.
Consumer and Business Banking generated $821 million of income before provision and taxes in the second quarter of 2023, compared with $569 million in the second quarter of 2022, and contributed $598 million of the Company’s net income in the second quarter of 2023. The provision for credit losses increased $98 million compared with the second quarter of 2022 due to normalizing credit conditions. Total net revenue was higher by $652 million (33.1 percent) in the second quarter of 2023 due to an increase of $616 million (39.0 percent) in net interest income, and an increase in total noninterest income of $36 million (9.2 percent). Net interest income increased due to the to the impact of rising interest rates on earning assets and the acquisition of MUB. Total noninterest income increased due to the acquisition of MUB. Total noninterest expense increased $400 million (28.6 percent) in the second quarter of 2023 compared with the second quarter of 2022 due to increases in net shared services expense due to investments in digital capabilities and the impact of the MUB acquisition, including intangible amortization driven by the core deposit intangible.
4
|
||
WEALTH MANAGEMENT AND INVESTMENT SERVICES | Preliminary data | |||||||||||||||||||||||||||||||
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
|||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$ | 482 | $ | 517 | $ | 370 | (6.8 | ) | 30.3 | $ | 999 | $ | 662 | 50.9 | ||||||||||||||||||
Noninterest income |
728 | 701 | 652 | 3.9 | 11.7 | 1,429 | 1,247 | 14.6 | ||||||||||||||||||||||||
Securities gains (losses), net |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Total net revenue |
1,210 | 1,218 | 1,022 | (.7 | ) | 18.4 | 2,428 | 1,909 | 27.2 | |||||||||||||||||||||||
Noninterest expense |
653 | 648 | 536 | .8 | 21.8 | 1,301 | 1,079 | 20.6 | ||||||||||||||||||||||||
Other intangibles |
17 | 17 | 3 | -- | nm | 34 | 13 | nm | ||||||||||||||||||||||||
Total noninterest expense |
670 | 665 | 539 | .8 | 24.3 | 1,335 | 1,092 | 22.3 | ||||||||||||||||||||||||
Income before provision and taxes |
540 | 553 | 483 | (2.4 | ) | 11.8 | 1,093 | 817 | 33.8 | |||||||||||||||||||||||
Provision for credit losses |
3 | (3 | ) | (4 | ) | nm | nm | -- | 4 | nm | ||||||||||||||||||||||
Income before income taxes |
537 | 556 | 487 | (3.4 | ) | 10.3 | 1,093 | 813 | 34.4 | |||||||||||||||||||||||
Income taxes and |
||||||||||||||||||||||||||||||||
taxable-equivalent adjustment |
134 | 139 | 122 | (3.6 | ) | 9.8 | 273 | 204 | 33.8 | |||||||||||||||||||||||
Net income |
403 | 417 | 365 | (3.4 | ) | 10.4 | 820 | 609 | 34.6 | |||||||||||||||||||||||
Net (income) loss attributable to |
||||||||||||||||||||||||||||||||
noncontrolling interests |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 403 | $ | 417 | $ | 365 | (3.4 | ) | 10.4 | $ | 820 | $ | 609 | 34.6 | ||||||||||||||||||
Average Balance Sheet Data |
||||||||||||||||||||||||||||||||
Loans |
$ | 24,568 | $ | 24,311 | $ | 22,285 | 1.1 | 10.2 | $ | 24,441 | $ | 21,483 | 13.8 | |||||||||||||||||||
Other earning assets |
421 | 380 | 233 | 10.8 | 80.7 | 401 | 237 | 69.2 | ||||||||||||||||||||||||
Goodwill |
1,792 | 1,787 | 1,718 | .3 | 4.3 | 1,790 | 1,739 | 2.9 | ||||||||||||||||||||||||
Other intangible assets |
426 | 442 | 300 | (3.6 | ) | 42.0 | 434 | 283 | 53.4 | |||||||||||||||||||||||
Assets |
29,008 | 28,604 | 25,728 | 1.4 | 12.7 | 28,808 | 25,062 | 14.9 | ||||||||||||||||||||||||
Noninterest-bearing deposits |
21,199 | 22,043 | 25,194 | (3.8 | ) | (15.9 | ) | 21,619 | 26,378 | (18.0 | ) | |||||||||||||||||||||
Interest-bearing deposits |
80,061 | 87,290 | 75,824 | (8.3 | ) | 5.6 | 83,656 | 75,007 | 11.5 | |||||||||||||||||||||||
Total deposits |
101,260 | 109,333 | 101,018 | (7.4 | ) | .2 | 105,275 | 101,385 | 3.8 | |||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
3,976 | 4,104 | 3,615 | (3.1 | ) | 10.0 | 4,040 | 3,604 | 12.1 |
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.
Wealth Management and Investment Services generated $540 million of income before provision and taxes in the second quarter of 2023, compared with $483 million in the second quarter of 2022, and contributed $403 million of the Company’s net income in the second quarter of 2023. The provision for credit losses increased $7 million compared with the second quarter of 2022 primarily due to higher ending loan balance growth in the second quarter of 2023. Total net revenue increased $188 million (18.4 percent) in the second quarter of 2023 reflecting an increase of $112 million (30.3 percent) in net interest income and $76 million (11.7 percent) in total noninterest income. Net interest income increased primarily due to the acquisition of MUB. Total noninterest income increased primarily due to higher trust and investment management fees driven by the acquisition of MUB and core business growth. Total noninterest expense increased $131 million (24.3 percent) compared with the second quarter of 2022 reflecting the impact of the MUB acquisition.
5
|
||
PAYMENT SERVICES | Preliminary data | |||||||||||||||||||||||||||||||
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
|||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$645 | $654 | $619 | (1.4) | 4.2 | $1,299 | $1,241 | 4.7 | ||||||||||||||||||||||||
Noninterest income |
1,051 | 937 | 993 | 12.2 | 5.8 | 1,988 | 1,850 | 7.5 | ||||||||||||||||||||||||
Securities gains (losses), net |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Total net revenue |
1,696 | 1,591 | 1,612 | 6.6 | 5.2 | 3,287 | 3,091 | 6.3 | ||||||||||||||||||||||||
Noninterest expense |
887 | 884 | 831 | .3 | 6.7 | 1,771 | 1,643 | 7.8 | ||||||||||||||||||||||||
Other intangibles |
28 | 29 | 34 | (3.4) | (17.6) | 57 | 68 | (16.2) | ||||||||||||||||||||||||
Total noninterest expense |
915 | 913 | 865 | .2 | 5.8 | 1,828 | 1,711 | 6.8 | ||||||||||||||||||||||||
Income before provision and taxes |
781 | 678 | 747 | 15.2 | 4.6 | 1,459 | 1,380 | 5.7 | ||||||||||||||||||||||||
Provision for credit losses |
314 | 220 | 221 | 42.7 | 42.1 | 534 | 351 | 52.1 | ||||||||||||||||||||||||
Income before income taxes |
467 | 458 | 526 | 2.0 | (11.2) | 925 | 1,029 | (10.1) | ||||||||||||||||||||||||
Income taxes and |
||||||||||||||||||||||||||||||||
taxable-equivalent adjustment |
117 | 115 | 132 | 1.7 | (11.4) | 232 | 258 | (10.1) | ||||||||||||||||||||||||
Net income |
350 | 343 | 394 | 2.0 | (11.2) | 693 | 771 | (10.1) | ||||||||||||||||||||||||
Net (income) loss attributable to |
||||||||||||||||||||||||||||||||
noncontrolling interests |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Net income attributable to U.S. Bancorp |
$350 | $343 | $394 | 2.0 | (11.2) | $693 | $771 | (10.1) | ||||||||||||||||||||||||
Average Balance Sheet Data |
||||||||||||||||||||||||||||||||
Loans |
$37,913 | $36,935 | $33,854 | 2.6 | 12.0 | $37,426 | $32,802 | 14.1 | ||||||||||||||||||||||||
Other earning assets |
74 | 302 | 1,023 | (75.5) | (92.8) | 187 | 1,023 | (81.7) | ||||||||||||||||||||||||
Goodwill |
3,330 | 3,320 | 3,318 | .3 | .4 | 3,325 | 3,321 | .1 | ||||||||||||||||||||||||
Other intangible assets |
359 | 385 | 437 | (6.8) | (17.8) | 372 | 450 | (17.3) | ||||||||||||||||||||||||
Assets |
44,127 | 42,854 | 41,014 | 3.0 | 7.6 | 43,493 | 39,762 | 9.4 | ||||||||||||||||||||||||
Noninterest-bearing deposits |
3,179 | 3,184 | 3,396 | (.2) | (6.4) | 3,181 | 3,534 | (10.0) | ||||||||||||||||||||||||
Interest-bearing deposits |
104 | 108 | 167 | (3.7) | (37.7) | 106 | 164 | (35.4) | ||||||||||||||||||||||||
Total deposits |
3,283 | 3,292 | 3,563 | (.3) | (7.9) | 3,287 | 3,698 | (11.1) | ||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
9,127 | 8,968 | 8,113 | 1.8 | 12.5 | 9,048 | 8,065 | 12.2 |
Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services and merchant processing.
Payment Services generated $781 million of income before provision and taxes in the second quarter of 2023, compared with $747 million in the second quarter of 2022, and contributed $350 million of the Company’s net income in the second quarter of 2023. The provision for credit losses increased $93 million (42.1 percent) compared with the second quarter of 2022 primarily due to normalizing credit conditions exhibited through increasing delinquency rates and lower consumer liquidity. Total net revenue increased $84 million (5.2 percent) in the second quarter of 2023 due to higher net interest income of $26 million (4.2 percent) and higher total noninterest income of $58 million (5.8 percent). Net interest income increased primarily due to higher loan yields driven by higher interest rates net of lower customer revolve rates, higher loan balances, and higher loan fees, mostly offset by higher funding costs. Total noninterest income increased year-over-year mainly due to continued strengthening of consumer and business spending across most sectors. Total noninterest expense increased $50 million (5.8 percent) reflecting higher net shared services expense driven by investment in infrastructure and technology development, in addition to higher compensation expense due to merit and core business growth.
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TREASURY AND CORPORATE SUPPORT | Preliminary data | |||||||||||||||||||||||||||||||
($ in millions) | Percent Change | |||||||||||||||||||||||||||||||
2Q 2023 |
1Q 2023 |
2Q 2022 |
2Q23 vs 1Q23 |
2Q23 vs 2Q22 |
YTD 2023 |
YTD 2022 |
Percent Change |
|||||||||||||||||||||||||
Condensed Income Statement |
||||||||||||||||||||||||||||||||
Net interest income (taxable-equivalent basis) |
$107 | $133 | $96 | (19.5) | 11.5 | $240 | $152 | 57.9 | ||||||||||||||||||||||||
Noninterest income |
171 | 185 | 222 | (7.6) | (23.0) | 356 | 447 | (20.4) | ||||||||||||||||||||||||
Securities gains (losses), net |
3 | (32) | 19 | nm | (84.2) | (29) | 37 | nm | ||||||||||||||||||||||||
Total net revenue |
281 | 286 | 337 | (1.7) | (16.6) | 567 | 636 | (10.8) | ||||||||||||||||||||||||
Noninterest expense |
547 | 597 | 448 | (8.4) | 22.1 | 1,144 | 701 | 63.2 | ||||||||||||||||||||||||
Other intangibles |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Total noninterest expense |
547 | 597 | 448 | (8.4) | 22.1 | 1,144 | 701 | 63.2 | ||||||||||||||||||||||||
Income (loss) before provision and taxes |
(266) | (311) | (111) | 14.5 | nm | (577) | (65) | nm | ||||||||||||||||||||||||
Provision for credit losses |
330 | 227 | 70 | 45.4 | nm | 557 | (10) | nm | ||||||||||||||||||||||||
Income (loss) before income taxes |
(596) | (538) | (181) | (10.8) | nm | (1,134) | (55) | nm | ||||||||||||||||||||||||
Income taxes and |
||||||||||||||||||||||||||||||||
taxable-equivalent adjustment |
(179) | (195) | (97) | 8.2 | (84.5) | (374) | (137) | nm | ||||||||||||||||||||||||
Net income (loss) |
(417) | (343) | (84) | (21.6) | nm | (760) | 82 | nm | ||||||||||||||||||||||||
Net (income) loss attributable to |
||||||||||||||||||||||||||||||||
noncontrolling interests |
(8) | (6) | (3) | (33.3) | nm | (14) | (4) | nm | ||||||||||||||||||||||||
Net income (loss) attributable to U.S. Bancorp |
$(425) | $(349) | $(87) | (21.8) | nm | $(774) | $78 | nm | ||||||||||||||||||||||||
Average Balance Sheet Data |
||||||||||||||||||||||||||||||||
Loans |
$5,509 | $5,631 | $4,056 | (2.2) | 35.8 | $5,569 | $4,139 | 34.5 | ||||||||||||||||||||||||
Other earning assets |
215,765 | 212,359 | 204,581 | 1.6 | 5.5 | 214,072 | 205,558 | 4.1 | ||||||||||||||||||||||||
Goodwill |
-- | -- | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||
Other intangible assets |
9 | 36 | -- | (75.0) | nm | 22 | -- | nm | ||||||||||||||||||||||||
Assets |
239,269 | 236,407 | 219,660 | 1.2 | 8.9 | 237,846 | 224,620 | 5.9 | ||||||||||||||||||||||||
Noninterest-bearing deposits |
2,649 | 2,885 | 2,519 | (8.2) | 5.2 | 2,766 | 2,547 | 8.6 | ||||||||||||||||||||||||
Interest-bearing deposits |
7,825 | 6,834 | 1,599 | 14.5 | nm | 7,333 | 2,174 | nm | ||||||||||||||||||||||||
Total deposits |
10,474 | 9,719 | 4,118 | 7.8 | nm | 10,099 | 4,721 | nm | ||||||||||||||||||||||||
Total U.S. Bancorp shareholders’ equity |
5,959 | 5,591 | 11,120 | 6.6 | (46.4) | 5,776 | 13,503 | (57.2) |
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.
Treasury and Corporate Support generated a $266 million loss before provision and taxes in the second quarter of 2023, compared with a $111 million loss in the second quarter of 2022, and recorded a net loss of $425 million in the second quarter of 2023. The provision for credit losses increased $260 million compared with the second quarter of 2022 primarily due to balance sheet optimization activities and increased economic uncertainty. Total net revenue was lower by $56 million (16.6 percent) in the second quarter of 2023 due to an increase of $11 million (11.5 percent) in net interest income, offset by a decrease of $67 million (27.8 percent) in total noninterest income. Net interest income increased primarily due to the acquisition of MUB, partially offset by higher funding costs. The decrease in total noninterest income was primarily due to balance sheet optimization activities, along with lower securities gains and commercial products revenue. Total noninterest expense increased $99 million (22.1 percent) compared with the second quarter of 2022 primarily due to higher merger and integration-related charges related to the acquisition of MUB, the impact of the acquisition of MUB and higher compensation expense due to higher merit and hiring to support business growth, partially offset by lower net shared services costs. Income taxes are assessed to each line of business at a managerial tax rate of 25.0 percent with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Treasury and Corporate Support.
7