EX-99.1

EX-99.1 2 d818595dex991.htm EX-99.1 EX-99.1

Exhibit 99.1


							U.S. Bancorp Reports Third Quarter 2019 Results • Record net revenue of $5,920 million, net income of $1,908 million and diluted earnings per share of $1.15 • Industry leading return on average assets of 1.57% and return on average common equity of 15.3%
3Q19 Key Financial Data							3Q19 Highlights

PROFITABILITY METRICS	3Q19		2Q19		3Q18		• Net income of $1,908 million and diluted earnings per common share of $1.15 • Industry leading return on average assets of 1.57% and return on average common equity of 15.3% • Return on tangible common equity of 19.4% • Returned 80% of 3Q earnings to shareholders through dividends and share buybacks • Noninterest income grew 5.0% on a linked quarter basis and 8.1% year over year • Total net revenue grew 3.9% year-over-year with positive operating leverage of 0.6% on a year-over-year basis • Average total loans grew 1.1% on a linked quarter basis and 4.0% year-over-year
Return on average assets (%)		1.57		1.55		1.58
Return on average common equity (%)		15.3		15.0		15.5
Return on tangible common equity (%) (a)		19.4		19.2		19.9
Net interest margin (%)		3.02		3.13		3.15
Efficiency ratio (%) (a)		53.3		54.3		53.5
INCOME STATEMENT (b)	3Q19		2Q19		3Q18
Net interest income (taxable-equivalent basis)		$3,306		$3,332		$3,281
Noninterest income		$2,614		$2,490		$2,418
Net income attributable to U.S. Bancorp		$1,908		$1,821		$1,815
Diluted earnings per common share		$1.15		$1.09		$1.06
Dividends declared per common share		$.42		$.37		$.37
BALANCE SHEET (b)	3Q19		2Q19		3Q18
Average total loans		$292,436		$289,218		$281,065
Average total deposits		$349,933		$345,232		$330,121
Net charge-off ratio		.48%		.49%		.46%
Book value per common share (period end)		$30.26		$29.63		$27.35
Basel III standardized CET1 (c)		9.6%		9.5%		9.0%
(a) See Non-GAAP Financial Measures reconciliation on page 16
(b) Dollars in millions, except per share data
(c) CET1 = Common equity tier 1 capital ratio

CEO Commentary

“Despite a challenging interest rate environment, we posted record revenue, net income and earnings per share in the third quarter, delivered industry leading returns on assets and equity, and grew our book value by over 10% from a year earlier. During the quarter we returned 80% of our earnings to shareholders through dividends and share buybacks. Third quarter loan and deposit growth were solid and momentum in our core fee businesses was supported by strong sales and volume growth. Mortgage revenue was particularly robust this quarter, reflecting both market conditions and the benefits of the investments we have made in our retail platform over the past several years. As we head into the final quarter of 2019, we feel good about our opportunity to gain market share across our franchise and our ability to prudently manage our operating expenses even as we invest in our digital capabilities and key business initiatives. I’d like to thank our employees for their hard work and dedication to delivering value to each of our constituents.”

— Andy Cecere, Chairman, President and CEO, U.S. Bancorp

In the Spotlight

“Outstanding” Community Reinvestment Act Rating

U.S. Bank recently announced it received the highest rating, “Outstanding,” for its recent Community Reinvestment Act (“CRA”) examination from the Office of the Comptroller of the Currency. The examination period was from January 1, 2012 through December 31, 2015. The Company also received an “Outstanding” rating on each of the three individual CRA tests for Lending, Investment, and Service.

Most Powerful Women in Banking and Finance

American Banker magazine recently named U.S. Bank Vice Chairs, Kate Quinn, Chief Administrative Officer, and Leslie Godridge, Co-Head of Corporate and Commercial Banking, to its 2019 “Most Powerful Women in Banking” list, and named Gunjan Kedia, U.S. Bank Vice Chair of Wealth Management and Investment Services, to its 2019 “Most Powerful Women in Finance” list. U.S. Bancorp also earned a Top Team Award.

Co-Branded Credit Card Agreement with BMW

U.S. Bank recently entered into a co-brand agreement with BMW Financial Services NA, LLC to issue credit cards that will deliver enhanced digital experiences and greater value to BMW, MINI and BMW Motorrad enthusiasts. The new program provides an enhanced experience with richer rewards where customers can earn and redeem points toward BMW products and services.

Transforming for the Future

U.S. Bank recently acquired talech, a software company that helps small and medium-sized businesses simplify operations, make better decisions and manage multiple operational tasks, including how businesses interact with their money, through a single, integrated point-of-sale system.

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Investor contact: Jennifer Thompson, 612.303.0778 | Media contact: Rebekah Fawcett, 612.303.9986


		U.S. Bancorp Third Quarter 2019 Results


INCOME STATEMENT HIGHLIGHTS
($ in millions, except per-share data)							Percent Change
	3Q		2Q		3Q		3Q19 vs			3Q19 vs		YTD		YTD		Percent
	2019		2019		2018		2Q19			3Q18		2019		2018		Change
Net interest income		$3,281		$3,305		$3,251		(.7	)		.9		$9,845		$9,616		2.4
Taxable-equivalent adjustment		25		27		30		(7.4	)		(16.7)		79		88		(10.2)
Net interest income (taxable-equivalent basis)		3,306		3,332		3,281		(.8	)		.8		9,924		9,704		2.3
Noninterest income		2,614		2,490		2,418		5.0			8.1		7,395		7,104		4.1
Total net revenue		5,920		5,822		5,699		1.7			3.9		17,319		16,808		3.0
Noninterest expense		3,144		3,153		3,044		(.3	)		3.3		9,384		9,184		2.2
Income before provision and income taxes		2,776		2,669		2,655		4.0			4.6		7,935		7,624		4.1
Provision for credit losses		367		365		343		.5			7.0		1,109		1,011		9.7
Income before taxes		2,409		2,304		2,312		4.6			4.2		6,826		6,613		3.2
Income taxes and taxable-equivalent adjustment		492		476		490		3.4			.4		1,373		1,351		1.6
Net income		1,917		1,828		1,822		4.9			5.2		5,453		5,262		3.6
Net (income) loss attributable to noncontrolling interests		(9)		(7)		(7)		(28.6)			(28.6)		(25)		(22)		(13.6)
Net income attributable to U.S. Bancorp		$1,908		$1,821		$1,815		4.8			5.1		$5,428		$5,240		3.6
Net income applicable to U.S. Bancorp common shareholders		$1,821		$1,741		$1,732		4.6			5.1		$5,175		$5,007		3.4
Diluted earnings per common share		$1.15		$1.09		$1.06		5.5			8.5		$3.25		$3.04		6.9

Net income attributable to U.S. Bancorp was $1,908 million for the third quarter of 2019, which was 5.1 percent higher than the third quarter of 2018, and 4.8 percent higher than the second quarter of 2019. Diluted earnings per common share were $1.15 in the third quarter of 2019, compared with $1.06 in the third quarter of 2018 and $1.09 in the second quarter of 2019.

The increase in net income year-over-year was driven by total net revenue growth of 3.9 percent partially offset by noninterest expense growth of 3.3 percent. Net interest income increased 0.9 percent (0.8 percent on a taxable-equivalent basis), mainly a result of loan growth and higher yields on reinvestment of securities, partially offset by the yield curve and deposit and funding mix. Noninterest income increased 8.1 percent compared with a year ago, driven by growth in payment services revenue, commercial products revenue, mortgage banking revenue and other noninterest income, partially offset by a decline in deposit service charges. Noninterest expense increased 3.3 percent primarily due to higher personnel expense, in part due to higher fee revenue production in mortgage and capital market activities, and higher technology investment costs in support of business growth. Partially offsetting these increases was lower other noninterest expense driven by lower FDIC assessment costs.

Net income increased on a linked quarter basis primarily due to an increase in total net revenue of 1.7 percent and a decrease in noninterest expense of 0.3 percent. The increase in total net revenue reflected higher noninterest income of 5.0 percent, partially offset by lower net interest income of 0.7 percent (0.8 percent on a taxable-equivalent basis) primarily due to the adverse impact of the yield curve and lower interest recoveries, partially offset by loan growth and an additional day in the third quarter. Noninterest income increased compared with the second quarter of 2019 driven by higher payment services revenue, mortgage banking revenue and other noninterest income. Noninterest expense decreased 0.3 percent on a linked quarter basis primarily driven by lower other noninterest expense, partially offset by higher personnel expense.

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		U.S. Bancorp Third Quarter 2019 Results


NET INTEREST INCOME
(Taxable-equivalent basis; $ in millions)							Change
	3Q 2019		2Q 2019		3Q 2018		3Q19 vs 2Q19		3Q19 vs 3Q18		YTD 2019		YTD 2018		Change
Components of net interest income Income on earning assets		$4,465		$4,480		$4,155		$(15)		$310		$13,326		$11,957		$1,369
Expense on interest-bearing liabilities		1,159		1,148		874		11		285		3,402		2,253		1,149
Net interest income		$3,306		$3,332		$3,281		$(26)		$25		$9,924		$9,704		$220

Average yields and rates paid
Earning assets yield		4.08%		4.21%		3.98%		(.13)%		.10%		4.16%		3.86%		.30%
Rate paid on interest-bearing liabilities		1.37		1.40		1.10		(.03)		.27		1.38		.96		.42
Gross interest margin		2.71%		2.81%		2.88%		(.10)%		(.17)%		2.78%		2.90%		(.12)%
Net interest margin		3.02%		3.13%		3.15%		(.11)%		(.13)%		3.10%		3.14%		(.04)%

Average balances
Investment securities (a)		$117,213		$115,460		$113,547		$1,753		$3,666		$115,628		$113,873		$1,755
Loans		292,436		289,218		281,065		3,218		11,371		289,278		279,699		9,579
Earning assets		435,673		426,933		415,177		8,740		20,496		427,426		413,246		14,180
Interest-bearing liabilities		336,627		329,743		314,816		6,884		21,811		329,562		312,894		16,668

(a) Excludes unrealized gain (loss)

Net interest income on a taxable-equivalent basis in the third quarter of 2019 was $3,306 million, an increase of $25 million (0.8 percent) over the third quarter of 2018. The increase was principally driven by earning assets growth and higher yields on securities, partially offset by declining rates and flatter yield curve as well as deposit and funding mix. Average earning assets were $20.5 billion (4.9 percent) higher than the third quarter of 2018, reflecting increases of $11.4 billion (4.0 percent) in average total loans, $3.7 billion (3.2 percent) in average investment securities and $4.1 billion (23.4 percent) in average other earning assets. Excluding the impact of the fourth quarter of 2018 sale of the majority of the Company’s FDIC covered loans, average total loans grew 4.7 percent compared with the third quarter of 2018.

Net interest income on a taxable-equivalent basis decreased $26 million (0.8 percent) on a linked quarter basis primarily driven by the impact of declining rates, flatter yield curve and lower interest recoveries, partially offset by earning assets growth and an additional day in the third quarter. Average earning assets were $8.7 billion (2.0 percent) higher on a linked quarter basis, reflecting increases of $3.2 billion (1.1 percent) in average total loans, $1.8 billion (1.5 percent) in average investment securities and $2.5 billion (12.9 percent) in average other earning assets.

The net interest margin in the third quarter of 2019 was 3.02 percent, compared with 3.15 percent in the third quarter of 2018 and 3.13 percent in the second quarter of 2019. Net interest margin decreased year-over-year primarily due to the impacts of the yield curve as well as deposit and funding mix and higher cash balances. The decrease in net interest margin on a linked quarter basis was primarily due to changes in the yield curve during the quarter and higher cash balances, in part, related to a change in policy on affiliate balances by the regulator of the Company’s Irish subsidiary.

Average investment securities in the third quarter of 2019 increased $3.7 billion (3.2 percent) over the third quarter of 2018 and $1.8 billion (1.5 percent) over the second quarter of 2019 primarily due to purchases of mortgage-backed securities, net of prepayments and maturities.

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		U.S. Bancorp Third Quarter 2019 Results


AVERAGE LOANS
($ in millions)							Percent Change
	3Q 2019		2Q 2019		3Q 2018		3Q19 vs 2Q19			3Q19 vs 3Q18			YTD 2019		YTD 2018		Percent Change

Commercial		$98,175		$97,776		$93,541		.4			5.0			$97,472		$92,776		5.1
Lease financing		5,485		5,457		5,507		.5			(.4	)		5,485		5,519		(.6	)
Total commercial		103,660		103,233		99,048		.4			4.7			102,957		98,295		4.7

Commercial mortgages		28,319		28,465		28,362		(.5	)		(.2	)		28,414		28,746		(1.2	)
Construction and development		10,671		10,900		11,180		(2.1	)		(4.6	)		10,860		11,172		(2.8	)
Total commercial real estate		38,990		39,365		39,542		(1.0	)		(1.4	)		39,274		39,918		(1.6	)

Residential mortgages		68,608		66,834		62,042		2.7			10.6			67,019		61,023		9.8

Credit card		23,681		22,830		21,774		3.7			8.8			23,040		21,428		7.5

Retail leasing		8,442		8,547		8,383		(1.2	)		.7			8,524		8,173		4.3
Home equity and second mortgages		15,601		15,831		16,000		(1.5	)		(2.5	)		15,807		16,080		(1.7	)
Other		33,454		32,578		31,520		2.7			6.1			32,657		31,882		2.4
Total other retail		57,497		56,956		55,903		.9			2.9			56,988		56,135		1.5

Covered loans (a)		--		--		2,756		--			nm			--		2,900		nm

Total loans		$292,436		$289,218		$281,065		1.1			4.0			$289,278		$279,699		3.4

(a) During the fourth quarter of 2018, the majority of the Company’s covered loans were sold or the loss share coverage expired, with any remaining loan balances reclassified to be included in their respective portfolio category.

Average total loans were $11.4 billion (4.0 percent) higher than the third quarter of 2018. Excluding the impact of the fourth quarter of 2018 sale of the majority of the Company’s FDIC covered loans, average total loans grew 4.7 percent over the prior year quarter. The increase was due to growth in residential mortgages (10.6 percent), total commercial loans (4.7 percent), credit card loans (8.8 percent), and total other retail loans (2.9 percent). These increases were partially offset by decreases in total commercial real estate loans (1.4 percent) given the later stage of the business cycle and the sale of covered loans in the fourth quarter of 2018.

Average total loans were $3.2 billion (1.1 percent) higher than the second quarter of 2019 primarily driven by growth in residential mortgages (2.7 percent) and credit card loans (3.7 percent).

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		U.S. Bancorp Third Quarter 2019 Results


AVERAGE DEPOSITS
($ in millions)							Percent Change
	3Q 2019		2Q 2019		3Q 2018		3Q19 vs 2Q19		3Q19 vs 3Q18			YTD 2019		YTD 2018		Percent Change

Noninterest-bearing deposits		$74,594		$73,096		$77,192		2.0		(3.4	)		$73,711		$78,546		(6.2	)
Interest-bearing savings deposits
Interest checking		72,007		70,433		69,330		2.2		3.9			71,539		69,865		2.4
Money market savings		114,475		108,633		100,688		5.4		13.7			107,568		102,453		5.0
Savings accounts		46,348		45,988		44,848		.8		3.3			45,855		44,770		2.4
Total savings deposits		232,830		225,054		214,866		3.5		8.4			224,962		217,088		3.6
Time deposits		42,509		47,082		38,063		(9.7)		11.7			44,890		37,525		19.6
Total interest-bearing deposits		275,339		272,136		252,929		1.2		8.9			269,852		254,613		6.0

Total deposits		$349,933		$345,232		$330,121		1.4		6.0			$343,563		$333,159		3.1

Average total deposits for the third quarter of 2019 were $19.8 billion (6.0 percent) higher than the third quarter of 2018. Average noninterest-bearing deposits decreased $2.6 billion (3.4 percent) year-over-year primarily due to the migration of balances to interest-bearing deposits and the continued deployment by customers of business deposits within Corporate and Commercial Banking given higher earning credit rates from a year ago. Average total savings deposits were $18.0 billion (8.4 percent) higher year-over-year driven by Wealth Management and Investment Services, Corporate and Commercial Banking and Consumer and Business Banking. Average time deposits were $4.4 billion (11.7 percent) higher than the prior year quarter. Changes in time deposits are largely related to those deposits managed as an alternative to other funding sources, based largely on relative pricing and liquidity characteristics. In addition, there was growth in consumer time deposits related to the migration of balances to higher yielding products.

Average total deposits increased $4.7 billion (1.4 percent) from the second quarter of 2019. On a linked quarter basis, average noninterest-bearing deposits increased $1.5 billion (2.0 percent). Average total savings deposits increased $7.8 billion (3.5 percent) on a linked quarter basis primarily due to increases in Wealth Management and Investment Services and Corporate and Commercial Banking. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, decreased $4.6 billion (9.7 percent) on a linked quarter basis.

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		U.S. Bancorp Third Quarter 2019 Results


NONINTEREST INCOME
($ in millions)							Percent Change
	3Q		2Q		3Q		3Q19 vs		3Q19 vs		YTD		YTD		Percent
	2019		2019		2018		2Q19		3Q18		2019		2018		Change

Credit and debit card revenue		$366		$365		$344		.3		6.4		$1,035		$1,019		1.6
Corporate payment products revenue		177		167		169		6.0		4.7		506		481		5.2
Merchant processing services		410		404		392		1.5		4.6		1,192		1,142		4.4
Trust and investment management fees		421		415		411		1.4		2.4		1,235		1,210		2.1
Deposit service charges		234		227		283		3.1		(17.3)		678		817		(17.0)
Treasury management fees		139		153		146		(9.2)		(4.8)		438		451		(2.9)
Commercial products revenue		240		249		216		(3.6)		11.1		708		670		5.7
Mortgage banking revenue		272		189		174		43.9		56.3		630		549		14.8
Investment products fees		46		47		47		(2.1)		(2.1)		138		140		(1.4)
Securities gains (losses), net		25		17		10		47.1		nm		47		25		88.0
Other		284		257		226		10.5		25.7		788		600		31.3

Total noninterest income		$2,614		$2,490		$2,418		5.0		8.1		$7,395		$7,104		4.1

Third quarter noninterest income of $2,614 million was $196 million (8.1 percent) higher than the third quarter of 2018 driven by growth in payment services revenue, commercial products revenue, mortgage banking revenue and other noninterest income, partially offset by a decline in deposit service charges. Payment services revenue increased $48 million (5.3 percent) due to $22 million (6.4 percent) higher credit and debit card revenue primarily driven by core business growth and processing days, as well as an increase in corporate payment products revenue of $8 million (4.7 percent), and higher merchant processing services revenue of $18 million (4.6%), both driven by higher sales volumes. Commercial products revenue increased $24 million (11.1 percent) primarily due to higher corporate bond fees and trading revenue related to stronger capital markets activities. Mortgage banking revenue increased $98 million (56.3 percent) reflecting higher origination and sales volumes related to home sales and refinancing activities given changing interest rates relative to a year ago. Other noninterest income also increased year-over-year primarily due to higher equity investment income and transition services agreement revenue associated with the sale of the Company’s ATM third-party servicing business in 2018. These increases were partially offset by lower deposit service charges which decreased $49 million (17.3 percent) primarily due to the ATM third-party servicing sale in 2018.

Noninterest income was $124 million (5.0 percent) higher in the third quarter of 2019 compared with the second quarter of 2019 driven by higher payment services revenue, mortgage banking revenue and other noninterest income. Payment services revenue increased $17 million (1.8 percent) as corporate payment products revenue grew $10 million (6.0 percent) driven by seasonally higher sales volumes and merchant processing services revenue increased $6 million (1.5 percent) primarily due to seasonally higher fee revenue. Mortgage banking revenue increased $83 million (43.9 percent) reflecting higher origination and sales volumes. Other noninterest income increased $27 million (10.5 percent) on a linked quarter basis primarily due to higher equity investment income.

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		U.S. Bancorp Third Quarter 2019 Results


NONINTEREST EXPENSE
($ in millions)							Percent Change
	3Q		2Q		3Q		3Q19 vs		3Q19 vs		YTD		YTD		Percent
	2019		2019		2018		2Q19		3Q18		2019		2018		Change

Compensation		$1,595		$1,574		$1,529		1.3		4.3		$4,728		$4,594		2.9
Employee benefits		324		314		294		3.2		10.2		971		923		5.2
Net occupancy and equipment		279		281		270		(.7)		3.3		837		797		5.0
Professional services		114		106		96		7.5		18.8		315		274		15.0
Marketing and business development		109		111		106		(1.8)		2.8		309		314		(1.6)
Technology and communications		277		270		247		2.6		12.1		804		724		11.0
Postage, printing and supplies		74		73		84		1.4		(11.9)		219		244		(10.2)
Other intangibles		42		42		41		--		2.4		124		120		3.3
Other		330		382		377		(13.6)		(12.5)		1,077		1,194		(9.8)

Total noninterest expense		$3,144		$3,153		$3,044		(.3)		3.3		$9,384		$9,184		2.2

Third quarter noninterest expense of $3,144 million was $100 million (3.3 percent) higher than the third quarter of 2018 primarily due to higher personnel costs, professional services expense, and technology investment, partially offset by lower other noninterest expense. Compensation expense increased $66 million (4.3 percent), from a year ago, principally due to the impact of merit increases and higher variable compensation related to business production within mortgage banking and the capital markets business lines. Employee benefits expense increased $30 million (10.2 percent) primarily due to increased medical costs. Professional services expense increased $18 million (18.8 percent) primarily due to business investments and enhancements to risk management programs. Technology and communications expense increased $30 million (12.1 percent) primarily driven by capital expenditures to support business growth. Partially offsetting these increases was a decrease in other noninterest expense of $47 million (12.5 percent) due to lower FDIC assessment costs, driven by the elimination of the surcharge in the fourth quarter of 2018, and lower costs related to tax-advantaged projects.

Noninterest expense decreased $9 million (0.3 percent) on a linked quarter basis. Compensation expense increased $21 million (1.3 percent) primarily due to an additional business day in the third quarter and variable compensation related to business production. Employee benefits expense increased $10 million (3.2 percent) primarily due to increased medical costs. Offsetting these increases was a decrease in other noninterest expense of $52 million (13.6 percent) primarily due to lower costs related to tax-advantaged projects and a seasonal decrease in merchant related charge-back liabilities.

Provision for Income Taxes

The provision for income taxes for the third quarter of 2019 resulted in a tax rate of 20.4 percent on a taxable-equivalent basis (effective tax rate of 19.6 percent), compared with 21.2 percent (effective tax rate of 20.2 percent) in the third quarter of 2018, and 20.7 percent on a taxable-equivalent basis (effective tax rate of 19.7 percent) in the second quarter of 2019.

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		U.S. Bancorp Third Quarter 2019 Results


ALLOWANCE FOR CREDIT LOSSES
($ in millions)	3Q						2Q						1Q						4Q						3Q
	2019			% (a)			2019			% (a)			2019			% (a)			2018			% (a)			2018			% (a)
Balance, beginning of period		$4,466						$4,451						$4,441						$4,426						$4,411

Net charge-offs
Commercial		72			.29			56			.23			71			.30			64			.27			63			.27
Lease financing		3			.22			3			.22			2			.15			3			.22			3			.22

Total commercial		75			.29			59			.23			73			.29			67			.26			66			.26
Commercial mortgages		3			.04			2			.03			--			--			(8	)		(.11	)		(5	)		(.07	)
Construction and development		3			.11			(1	)		(.04	)		--			--			1			.04			(4	)		(.14	)

Total commercial real estate		6			.06			1			.01			--			--			(7	)		(.07	)		(9	)		(.09	)

Residential mortgages		(3	)		(.02	)		4			.02			3			.02			2			.01			4			.03

Credit card		211			3.53			227			3.99			225			4.04			219			3.88			206			3.75

Retail leasing		3			.14			2			.09			4			.19			3			.14			3			.14
Home equity and second mortgages		(1	)		(.03	)		(1	)		(.03	)		(1	)		(.03	)		1			.02			(1	)		(.02	)
Other		61			.72			58			.71			63			.80			68			.85			59			.74

Total other retail		63			.43			59			.42			66			.47			72			.51			61			.43

Total net charge-offs		352			.48			350			.49			367			.52			353			.49			328			.46
Provision for credit losses		367						365						377						368						343

Balance, end of period		$4,481						$4,466						$4,451						$4,441						$4,426

Components
Allowance for loan losses		$4,007						$4,019						$3,990						$3,973						$3,954
Liability for unfunded credit commitments		474						447						461						468						472

Total allowance for credit losses		$4,481						$4,466						$4,451						$4,441						$4,426

Gross charge-offs		$451						$464						$473						$442						$428
Gross recoveries		$99						$114						$106						$89						$100

Allowance for credit losses as a percentage of
Period-end loans		1.52						1.53						1.55						1.55						1.57
Nonperforming loans		541						556						519						544						544
Nonperforming assets		458						469						443						449						441

(a) Annualized and calculated on average loan balances

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		U.S. Bancorp Third Quarter 2019 Results

Credit quality was relatively stable on a linked quarter and year-over-year basis. The Company’s provision for credit losses for the third quarter of 2019 was $367 million, which was $2 million (0.5 percent) higher than the prior quarter and $24 million (7.0 percent) higher than the third quarter of 2018, primarily reflecting loan growth.

Total net charge-offs in the third quarter of 2019 were $352 million, compared with $350 million in the second quarter of 2019, and $328 million in the third quarter of 2018. Net charge-offs increased $2 million (0.6 percent) compared with the second quarter of 2019 primarily due to higher total commercial and total commercial real estate net charge-offs, mostly offset by lower credit card and residential mortgage net charge-offs. Net charge-offs increased $24 million (7.3 percent) compared with the third quarter of 2018 primarily due to higher total commercial and total commercial real estate net charge-offs in addition to higher credit card net charge-offs, partially offset by lower residential mortgage net charge-offs. The net charge-off ratio was 0.48 percent in the third quarter of 2019, compared with 0.49 percent in the second quarter of 2019 and 0.46 percent in the third quarter of 2018.

The allowance for credit losses was $4,481 million at September 30, 2019, compared with $4,466 million at June 30, 2019, and $4,426 million at September 30, 2018. The ratio of the allowance for credit losses to period-end loans was 1.52 percent at September 30, 2019, compared with 1.53 percent at June 30, 2019, and 1.57 percent at September 30, 2018. The ratio of the allowance for credit losses to nonperforming loans was 541 percent at September 30, 2019, compared with 556 percent at June 30, 2019, and 544 percent at September 30, 2018.

Nonperforming assets were $979 million at September 30, 2019, compared with $953 million at June 30, 2019, and $1,004 million at September 30, 2018. The ratio of nonperforming assets to loans and other real estate was 0.33 percent at September 30, 2019, compared with 0.33 percent at June 30, 2019, and 0.36 percent at September 30, 2018. The increase in nonperforming assets on a linked quarter basis was driven by increases in nonperforming total commercial loans, partially offset by lower nonperforming residential mortgages. The decrease in nonperforming assets on a year-over-year basis was driven by decreases in nonperforming residential mortgages, total commercial real estate, and other real estate owned, partially offset by an increase in nonperforming total commercial loans. Accruing loans 90 days or more past due were $600 million at September 30, 2019, compared with $752 million at June 30, 2019, and $551 million at September 30, 2018. The June 30, 2019, commercial loan 90 days past due delinquencies were elevated related to one customer that was resolved in the third quarter without a credit loss.


DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES
(Percent)	Sep 30		Jun 30		Mar 31		Dec 31		Sep 30
	2019		2019		2019		2018		2018

Delinquent loan ratios - 90 days or more past due excluding nonperforming loans
Commercial		.10		.26		.07		.07		.06
Commercial real estate		.01		--		.01		--		.01
Residential mortgages		.17		.17		.18		.18		.19
Credit card		1.16		1.14		1.29		1.25		1.18
Other retail		.18		.17		.19		.19		.17
Covered loans		--		--		--		--		.86
Total loans		.20		.26		.21		.20		.20

Delinquent loan ratios - 90 days or more past due including nonperforming loans
Commercial		.40		.53		.34		.27		.28
Commercial real estate		.23		.24		.33		.29		.27
Residential mortgages		.53		.55		.62		.63		.69
Credit card		1.16		1.14		1.29		1.25		1.18
Other retail		.47		.47		.49		.54		.49
Covered loans		--		--		--		--		.86
Total loans		.49		.53		.51		.49		.48

LOGO


		U.S. Bancorp Third Quarter 2019 Results


ASSET QUALITY (a)
($ in millions)
	Sep 30		Jun 30		Mar 31		Dec 31		Sep 30
	2019		2019		2019		2018		2018
Nonperforming loans
Commercial		$290		$254		$247		$186		$193
Lease financing		29		25		24		23		23
Total commercial		319		279		271		209		216
Commercial mortgages		82		81		79		76		77
Construction and development		7		11		48		39		28
Total commercial real estate		89		92		127		115		105
Residential mortgages		251		263		287		296		317
Credit card		--		--		--		--		--
Other retail		170		169		173		197		175
Covered loans		--		--		--		--		--

Total nonperforming loans		829		803		858		817		813

Other real estate		84		88		93		111		100

Covered other real estate		--		--		--		--		19

Other nonperforming assets		66		62		54		61		72

Total nonperforming assets		$979		$953		$1,005		$989		$1,004
Accruing loans 90 days or more past due		$600		$752		$595		$584		$551

Performing restructured loans, excluding GNMA		$2,145		$2,142		$2,173		$2,218		$2,272

Performing restructured GNMA		$1,690		$1,598		$1,578		$1,639		$1,668

Nonperforming assets to loans plus ORE (%)		.33		.33		.35		.34		.36

(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due

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		U.S. Bancorp Third Quarter 2019 Results


COMMON SHARES
(Millions)	3Q 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018

Beginning shares outstanding		1,584		1,599		1,608		1,623		1,636
Shares issued for stock incentive plans, acquisitions and other corporate purposes		1		--		3		1		1
Shares repurchased		(14)		(15)		(12)		(16)		(14)
Ending shares outstanding		1,571		1,584		1,599		1,608		1,623


CAPITAL POSITION
($ in millions)	Sep 30 2019			Jun 30 2019			Mar 31 2019			Dec 31 2018			Sep 30 2018

Total U.S. Bancorp shareholders’ equity	$	53,517		$	52,913		$	52,057		$	51,029		$	50,375

Basel III Standardized Approach
Common equity tier 1 capital	$	37,653		$	36,909		$	35,732		$	34,724		$	34,097
Tier 1 capital		43,667			42,923			41,748			40,741			40,114
Total risk-based capital		51,684			50,370			49,194			48,178			47,531

Common equity tier 1 capital ratio		9.6	%		9.5	%		9.3	%		9.1	%		9.0	%
Tier 1 capital ratio		11.2			11.0			10.9			10.7			10.6
Total risk-based capital ratio		13.2			13.0			12.8			12.6			12.6
Leverage ratio		9.3			9.3			9.2			9.0			9.0

Basel III Advanced Approaches
Common equity tier 1 capital ratio		12.6			12.3			12.0			11.8			11.8

Tangible common equity to tangible assets (a)		8.0			7.9			7.9			7.8			7.7
Tangible common equity to risk-weighted assets (a)		9.7			9.7			9.5			9.4			9.3

(a) See Non-GAAP Financial Measures reconciliation on page 16

Total U.S. Bancorp shareholders’ equity was $53.5 billion at September 30, 2019, compared with $52.9 billion at June 30, 2019, and $50.4 billion at September 30, 2018. During the third quarter, the Company returned 80 percent of earnings to shareholders through dividends and share buybacks.

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 9.6 percent at September 30, 2019, compared with 9.5 percent at June 30, 2019, and 9.0 percent at September 30, 2018. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III advanced approaches method was 12.6 percent at September 30, 2019, compared with 12.3 percent at June 30, 2019, and 11.8 percent at September 30, 2018.

LOGO


		U.S. Bancorp Third Quarter 2019 Results

Investor Conference Call

On Wednesday, October 16, 2019, at 8:30 a.m. CDT, Chairman, President and Chief Executive Officer Andy Cecere along with Vice Chairman and Chief Financial Officer Terry Dolan will host a conference call to review the financial results. The conference call will be available online or by telephone. To access the webcast and presentation, visit U.S. Bancorp’s 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 866-316-1409. Participants calling from outside the United States and Canada, please dial 706-634-9086. The conference ID number for all participants is 3878343. For those unable to participate during the live call, a recording will be available at approximately 11:30 a.m. CDT on Wednesday, October 16 and will be accessible until Wednesday, October 23 at 11:59 p.m. CDT. To access the recorded message within the United States and Canada, please dial 855-859-2056. If calling from outside the United States and Canada, please dial 404-537-3406 to access the recording. The conference ID is 3878343.

About U.S. Bancorp

U.S. Bancorp, with 74,000 employees and $488 billion in assets as of September 30, 2019, is the parent company of U.S. Bank, the fifth-largest commercial bank in the United States. The Minneapolis-based bank blends its relationship teams, branches and ATM network with mobile and online tools that allow customers to bank how, when and where they prefer. U.S. Bank is committed to serving its millions of retail, business, wealth management, payment, commercial and corporate, and investment services customers across the country and around the world as a trusted financial partner, a commitment recognized by the Ethisphere Institute naming the bank a 2019 World’s Most Ethical Company. Visit U.S. Bank at www.usbank.com or follow on social media to stay up to date with company news.

Forward-looking Statements

The following information appears in accordance with 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, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. Deterioration in general business and economic conditions or turbulence in domestic or global financial markets 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. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets, could cause credit losses and deterioration in asset values. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in the level of tariffs and other trade policies of the United States and its global trading partners; changes in customer behavior and preferences; breaches in data security; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational risk.

For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2018, on file with the Securities and Exchange Commission, including the sections entitled “Corporate Risk Profile” and “Risk Factors” contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. 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. 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.

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		U.S. Bancorp Third Quarter 2019 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

•

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 defined in banking regulations. 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.

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.

LOGO


CONSOLIDATED STATEMENT OF INCOME
(Dollars and Shares in Millions, Except Per Share Data) (Unaudited)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Interest Income
Loans		$3,555			$3,353			$10,677			$9,645
Loans held for sale		48			36			107			108
Investment securities		734			661			2,184			1,927
Other interest income		100			73			271			182
Total interest income		4,437			4,123			13,239			11,862
Interest Expense
Deposits		744			491			2,201			1,263
Short-term borrowings		97			104			281			265
Long-term debt		315			277			912			718
Total interest expense		1,156			872			3,394			2,246
Net interest income		3,281			3,251			9,845			9,616
Provision for credit losses		367			343			1,109			1,011
Net interest income after provision for credit losses		2,914			2,908			8,736			8,605
Noninterest Income
Credit and debit card revenue		366			344			1,035			1,019
Corporate payment products revenue		177			169			506			481
Merchant processing services		410			392			1,192			1,142
Trust and investment management fees		421			411			1,235			1,210
Deposit service charges		234			283			678			817
Treasury management fees		139			146			438			451
Commercial products revenue		240			216			708			670
Mortgage banking revenue		272			174			630			549
Investment products fees		46			47			138			140
Securities gains (losses), net		25			10			47			25
Other		284			226			788			600
Total noninterest income		2,614			2,418			7,395			7,104
Noninterest Expense
Compensation		1,595			1,529			4,728			4,594
Employee benefits		324			294			971			923
Net occupancy and equipment		279			270			837			797
Professional services		114			96			315			274
Marketing and business development		109			106			309			314
Technology and communications		277			247			804			724
Postage, printing and supplies		74			84			219			244
Other intangibles		42			41			124			120
Other		330			377			1,077			1,194
Total noninterest expense		3,144			3,044			9,384			9,184
Income before income taxes		2,384			2,282			6,747			6,525
Applicable income taxes		467			460			1,294			1,263
Net income		1,917			1,822			5,453			5,262
Net (income) loss attributable to noncontrolling interests		(9	)		(7	)		(25	)		(22	)
Net income attributable to U.S. Bancorp		$1,908			$1,815			$5,428			$5,240
Net income applicable to U.S. Bancorp common shareholders		$1,821			$1,732			$5,175			$5,007
Earnings per common share		$1.16			$1.06			$3.26			$3.05
Diluted earnings per common share		$1.15			$1.06			$3.25			$3.04
Dividends declared per common share		$.42			$.37			$1.16			$.97
Average common shares outstanding		1,575			1,629			1,589			1,641
Average diluted common shares outstanding		1,578			1,633			1,592			1,645


CONSOLIDATED ENDING BALANCE SHEET

(Dollars in Millions)	September 30, 2019			December 31, 2018			September 30, 2018
Assets		(Unaudited	)					(Unaudited	)
Cash and due from banks		$15,272			$21,453			$20,082
Investment securities
Held-to-maturity		46,481			46,050			46,046
Available-for-sale		74,598			66,115			64,912
Loans held for sale		4,528			2,056			4,533
Loans
Commercial		104,654			102,444			99,273
Commercial real estate		39,268			39,539			39,966
Residential mortgages		69,378			65,034			62,904
Credit card		23,890			23,363			21,869
Other retail		57,448			56,430			56,049
Covered loans		--			--			1,400
Total loans		294,638			286,810			281,461
Less allowance for loan losses		(4,007	)		(3,973	)		(3,954	)
Net loans		290,631			282,837			277,507
Premises and equipment		3,673			2,457			2,438
Goodwill		9,632			9,369			9,530
Other intangible assets		2,983			3,392			3,544
Other assets		39,873			33,645			36,015
Total assets		$487,671			$467,374			$464,607

Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing		$82,232			$81,811			$77,146
Interest-bearing		277,483			263,664			254,032
Total deposits		359,715			345,475			331,178
Short-term borrowings		14,579			14,139			23,868
Long-term debt		41,274			41,340			40,894
Other liabilities		17,956			14,763			17,660
Total liabilities		433,524			415,717			413,600
Shareholders’ equity
Preferred stock		5,984			5,984			5,984
Common stock		21			21			21
Capital surplus		8,490			8,469			8,479
Retained earnings		62,419			59,065			57,878
Less treasury stock		(22,224	)		(20,188	)		(19,414	)
Accumulated other comprehensive income (loss)		(1,173	)		(2,322	)		(2,573	)
Total U.S. Bancorp shareholders’ equity		53,517			51,029			50,375
Noncontrolling interests		630			628			632
Total equity		54,147			51,657			51,007
Total liabilities and equity		$487,671			$467,374			$464,607


NON-GAAP FINANCIAL MEASURES

(Dollars in Millions, Unaudited)	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018
Total equity		$54,147			$53,540			$52,686			$51,657			$51,007
Preferred stock		(5,984	)		(5,984	)		(5,984	)		(5,984	)		(5,984	)
Noncontrolling interests		(630	)		(627	)		(629	)		(628	)		(632	)
Goodwill (net of deferred tax liability) (1)		(8,781	)		(8,708	)		(8,716	)		(8,549	)		(8,682	)
Intangible assets, other than mortgage servicing rights		(687	)		(703	)		(685	)		(601	)		(627	)
Tangible common equity (a)		38,065			37,518			36,672			35,895			35,082

Total assets		487,671			481,719			475,775			467,374			464,607
Goodwill (net of deferred tax liability) (1)		(8,781	)		(8,708	)		(8,716	)		(8,549	)		(8,682	)
Intangible assets, other than mortgage servicing rights		(687	)		(703	)		(685	)		(601	)		(627	)
Tangible assets (b)		478,203			472,308			466,374			458,224			455,298

Risk-weighted assets, determined in accordance with the Basel III standardized approach (c)		390,622	*		388,709			384,394			381,661			377,713

Ratios*
Tangible common equity to tangible assets (a)/(b)		8.0	%		7.9	%		7.9	%		7.8	%		7.7	%
Tangible common equity to risk-weighted assets (a)/(c)		9.7			9.7			9.5			9.4			9.3

	Three Months Ended
	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018
Net income applicable to U.S. Bancorp common shareholders		$1,821			$1,741			$1,613			$1,777			$1,732
Intangibles amortization (net-of-tax)		33			33			32			32			32
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization		1,854			1,774			1,645			1,809			1,764
Annualized net income applicable to U.S. Bancorp common shareholders, excluding intangible amortization (d)		7,356			7,115			6,671			7,177			6,998

Average total equity		53,921			53,066			52,218			51,370			50,768
Average preferred stock		(5,984	)		(5,984	)		(5,984	)		(5,984	)		(5,714	)
Average noncontrolling interests		(629	)		(628	)		(629	)		(630	)		(630	)
Average goodwill (net of deferred tax liability) (1)		(8,725	)		(8,715	)		(8,732	)		(8,574	)		(8,620	)
Average intangible assets, other than mortgage servicing rights		(689	)		(681	)		(671	)		(605	)		(584	)
Average tangible common equity (e)		37,894			37,058			36,202			35,577			35,220

Return on tangible common equity (d)/(e)		19.4	%		19.2	%		18.4	%		20.2	%		19.9	%

Net interest income		$3,281			$3,305			$3,259			$3,303			$3,251
Taxable-equivalent adjustment (2)		25			27			27			28			30
Net interest income, on a taxable-equivalent basis		3,306			3,332			3,286			3,331			3,281

Net interest income, on a taxable-equivalent basis (as calculated above)		3,306			3,332			3,286			3,331			3,281
Noninterest income		2,614			2,490			2,291			2,498			2,418
Less: Securities gains (losses), net		25			17			5			5			10
Total net revenue, excluding net securities gains (losses) (f)		5,895			5,805			5,572			5,824			5,689

Noninterest expense (g)		3,144			3,153			3,087			3,280			3,044
Less: Intangible amortization		42			42			40			41			41
Noninterest expense, excluding intangible amortization (h)		3,102			3,111			3,047			3,239			3,003

Efficiency ratio (g)/(f)		53.3	%		54.3	%		55.4	%		56.3	%		53.5	%
Tangible efficiency ratio (h)/(f)		52.6			53.6			54.7			55.6			52.8

*	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)	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.

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LINE OF BUSINESS FINANCIAL PERFORMANCE (a)
($ in millions)	Net Income Attributable to U.S. Bancorp						Percent Change						Net Income Attributable to U.S. Bancorp							3Q 2019
Business Line	3Q 2019		2Q 2019		3Q 2018		3Q19 vs 2Q19			3Q19 vs 3Q18			YTD 2019		YTD 2018		Percent Change			Earnings Composition
Corporate and Commercial Banking		$365		$415		$391		(12.0	)		(6.6	)		$1,181		$1,191		(.8	)		19	%
Consumer and Business Banking		640		557		580		14.9			10.3			1,747		1,665		4.9			34
Wealth Management and Investment Services		234		231		223		1.3			4.9			682		625		9.1			12
Payment Services		416		362		392		14.9			6.1			1,108		1,097		1.0			22
Treasury and Corporate Support		253		256		229		(1.2	)		10.5			710		662		7.3			13

Consolidated Company		$1,908		$1,821		$1,815		4.8			5.1			$5,428		$5,240		3.6			100	%

(a) preliminary data

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. Noninterest expenses incurred by centrally managed operations or business lines that directly support another business line’s operations are charged to the applicable business line based on its utilization of those services, primarily measured by the volume of customer activities, number of employees or other relevant factors. These allocated expenses are reported as net shared services expense within noninterest expense. 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. 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 2019, certain organization and methodology changes were made and, accordingly, prior period results were restated and presented on a comparable basis.

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CORPORATE AND COMMERCIAL BANKING (a)
($ in millions)								Percent Change
	3Q 2019		2Q 2019			3Q 2018		3Q19 vs 2Q19			3Q19 vs 3Q18			YTD 2019		YTD 2018		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$709		$718			$741		(1.3	)		(4.3	)		$2,153		$2,189		(1.6	)
Noninterest income		213		245			200		(13.1	)		6.5			667		630		5.9
Securities gains (losses), net		--		--			--		--			--			--		--		--
Total net revenue		922		963			941		(4.3	)		(2.0	)		2,820		2,819		--
Noninterest expense		394		410			383		(3.9	)		2.9			1,214		1,190		2.0
Other intangibles		1		1			1		--			--			3		3		--
Total noninterest expense		395		411			384		(3.9	)		2.9			1,217		1,193		2.0
Income before provision and taxes		527		552			557		(4.5	)		(5.4	)		1,603		1,626		(1.4	)
Provision for credit losses		40		(2	)		35		nm			14.3			27		37		(27.0	)
Income before income taxes		487		554			522		(12.1	)		(6.7	)		1,576		1,589		(.8	)
Income taxes and taxable-equivalent adjustment		122		139			131		(12.2	)		(6.9	)		395		398		(.8	)
Net income		365		415			391		(12.0	)		(6.6	)		1,181		1,191		(.8	)
Net (income) loss attributable to noncontrolling interests		--		--			--		--			--			--		--		--
Net income attributable to U.S. Bancorp		$365		$415			$391		(12.0	)		(6.6	)		$1,181		$1,191		(.8	)

Average Balance Sheet Data
Loans		$96,260		$96,587			$93,362		(.3	)		3.1			$96,420		$93,568		3.0
Other earning assets		4,016		3,883			3,042		3.4			32.0			3,692		2,998		23.1
Goodwill		1,647		1,647			1,647		--			--			1,647		1,647		--
Other intangible assets		8		9			10		(11.1	)		(20.0	)		9		11		(18.2	)
Assets		107,156		106,679			102,143		.4			4.9			106,335		102,414		3.8

Noninterest-bearing deposits		28,863		28,880			32,376		(.1	)		(10.9	)		29,242		33,305		(12.2	)
Interest-bearing deposits		72,061		70,697			68,569		1.9			5.1			71,293		69,622		2.4
Total deposits		100,924		99,577			100,945		1.4			--			100,535		102,927		(2.3	)

Total U.S. Bancorp shareholders’ equity		10,381		10,355			10,426		.3			(.4	)		10,391		10,447		(.5	)

(a) preliminary data

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 contributed $365 million of the Company’s net income in the third quarter of 2019, compared with $391 million in the third quarter of 2018. Total net revenue decreased $19 million (2.0 percent) due to a decrease of $32 million (4.3 percent) in net interest income, partially offset by an increase of $13 million (6.5 percent) in total noninterest income. Net interest income decreased primarily due to lower noninterest bearing deposit balances compared with last year and lower spreads on loans, reflecting a competitive marketplace, partially offset by the impact of higher rates on the margin benefit from deposits and loan growth. Noninterest bearing deposits are declining as customers deploy balances to support business growth. Total noninterest income increased year-over-year primarily due to higher trading revenue and corporate bond underwriting fees. Total noninterest expense was $11 million (2.9 percent) higher compared with a year ago primarily due to an increase in net shared services expense driven by technology development and investment in infrastructure, higher salary expense driven by merit increases, and an increase in production incentives within capital markets. These increases were partially offset by lower FDIC assessment costs. The provision for credit losses increased $5 million (14.3 percent) reflecting an unfavorable change in the reserve allocation and slightly higher net charge-offs.

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CONSUMER AND BUSINESS BANKING (a)
($ in millions)							Percent Change
	3Q 2019		2Q 2019		3Q 2018		3Q19 vs 2Q19		3Q19 vs 3Q18		YTD 2019		YTD 2018		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$1,580		$1,577		$1,554		.2		1.7		$4,720		$4,581		3.0
Noninterest income		668		567		583		17.8		14.6		1,770		1,754		.9
Securities gains (losses), net		--		--		--		--		--		--		--		--

Total net revenue		2,248		2,144		2,137		4.9		5.2		6,490		6,335		2.4
Noninterest expense		1,321		1,317		1,302		.3		1.5		3,927		3,930		(.1)
Other intangibles		5		5		7		--		(28.6)		15		21		(28.6)

Total noninterest expense		1,326		1,322		1,309		.3		1.3		3,942		3,951		(.2)

Income before provision and taxes		922		822		828		12.2		11.4		2,548		2,384		6.9
Provision for credit losses		69		79		54		(12.7)		27.8		218		164		32.9

Income before income taxes		853		743		774		14.8		10.2		2,330		2,220		5.0
Income taxes and taxable-equivalent adjustment		213		186		194		14.5		9.8		583		555		5.0

Net income		640		557		580		14.9		10.3		1,747		1,665		4.9
Net (income) loss attributable to noncontrolling interests		--		--		--		--		--		--		--		--

Net income attributable to U.S. Bancorp		$640		$557		$580		14.9		10.3		$1,747		$1,665		4.9


Average Balance Sheet Data
Loans		$145,893		$143,726		$141,349		1.5		3.2		$143,809		$140,788		2.1
Other earning assets		4,711		3,333		3,385		41.3		39.2		3,486		3,535		(1.4)
Goodwill		3,475		3,475		3,631		--		(4.3)		3,475		3,631		(4.3)
Other intangible assets		2,442		2,717		2,974		(10.1)		(17.9)		2,679		2,926		(8.4)
Assets		160,814		157,395		155,537		2.2		3.4		157,655		155,184		1.6

Noninterest-bearing deposits		28,630		27,075		28,196		5.7		1.5		27,433		27,607		(.6)
Interest-bearing deposits		129,668		128,904		125,549		.6		3.3		128,634		124,668		3.2

Total deposits		158,298		155,979		153,745		1.5		3.0		156,067		152,275		2.5

Total U.S. Bancorp shareholders’ equity		11,666		11,737		11,841		(.6)		(1.5)		11,714		11,843		(1.1)

(a) preliminary data

Consumer and Business Banking delivers products and services through banking offices, telephone servicing and sales, on-line services, direct mail, ATM processing and mobile devices. It encompasses community banking, metropolitan banking and indirect lending, as well as mortgage banking.

Consumer and Business Banking contributed $640 million of the Company’s net income in the third quarter of 2019, compared with $580 million in the third quarter of 2018. Total net revenue increased $111 million (5.2 percent) due to a $26 million (1.7 percent) increase in net interest income and an $85 million (14.6 percent) increase in total noninterest income. Net interest income increased primarily due to the impact of higher rates on the margin benefit from deposits as well as growth in both interest-bearing deposit balances and loan volumes, partially offset by lower spreads on loans. Total noninterest income increased primarily due to higher mortgage banking revenue driven by higher origination and sales volumes, as well as transition services agreement revenue associated with the sale of the Company’s ATM third-party servicing business in 2018, partially offset by the reduction in ATM processing services revenue due to the sale. Total noninterest expense in the third quarter of 2019 increased $17 million (1.3 percent) primarily due to higher net shared services expense, reflecting the impact of technology development and investment in infrastructure supporting business growth as well as costs to manage the business, and higher production incentives in support of business growth. Partially offsetting these increases were lower FDIC assessment costs and lower mortgage banking costs. The provision for credit losses increased $15 million (27.8 percent) primarily due to an unfavorable change in the reserve allocation and higher net charge-offs.

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WEALTH MANAGEMENT AND INVESTMENT SERVICES (a)
($ in millions)								Percent Change
	3Q 2019		2Q 2019		3Q 2018			3Q19 vs 2Q19			3Q19 vs 3Q18			YTD 2019		YTD 2018			Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$294		$302		$284			(2.6	)		3.5			$888		$844			5.2
Noninterest income		452		445		444			1.6			1.8			1,327		1,305			1.7
Securities gains (losses), net		--		--		--			--			--			--		--			--
Total net revenue		746		747		728			(.1	)		2.5			2,215		2,149			3.1
Noninterest expense		430		434		429			(.9	)		.2			1,297		1,304			(.5	)
Other intangibles		3		3		4			--			(25.0	)		9		12			(25.0	)
Total noninterest expense		433		437		433			(.9	)		--			1,306		1,316			(.8	)
Income before provision and taxes		313		310		295			1.0			6.1			909		833			9.1
Provision for credit losses		1		2		(3	)		(50.0	)		nm			--		(2	)		nm
Income before income taxes		312		308		298			1.3			4.7			909		835			8.9
Income taxes and taxable-equivalent adjustment		78		77		75			1.3			4.0			227		210			8.1
Net income		234		231		223			1.3			4.9			682		625			9.1
Net (income) loss attributable to noncontrolling interests		--		--		--			--			--			--		--			--
Net income attributable to U.S. Bancorp		$234		$231		$223			1.3			4.9			$682		$625			9.1

Average Balance Sheet Data
Loans		$10,260		$9,896		$9,475			3.7			8.3			$9,993		$9,224			8.3
Other earning assets		265		341		172			(22.3	)		54.1			284		167			70.1
Goodwill		1,617		1,617		1,618			--			(.1	)		1,617		1,619			(.1	)
Other intangible assets		47		50		61			(6.0	)		(23.0	)		50		66			(24.2	)
Assets		13,543		13,175		12,655			2.8			7.0			13,302		12,306			8.1
Noninterest-bearing deposits		13,575		13,582		13,184			(.1	)		3.0			13,478		14,101			(4.4	)
Interest-bearing deposits		65,858		61,401		55,921			7.3			17.8			60,508		56,562			7.0
Total deposits		79,433		74,983		69,105			5.9			14.9			73,986		70,663			4.7

Total U.S. Bancorp shareholders’ equity		2,530		2,529		2,486			--			1.8			2,525		2,472			2.1

(a) preliminary data

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 contributed $234 million of the Company’s net income in the third quarter of 2019, compared with $223 million in the third quarter of 2018. Total net revenue increased $18 million (2.5 percent) year-over-year due to increases in net interest income of $10 million (3.5 percent) and noninterest income of $8 million (1.8 percent). Net interest income increased year-over-year primarily due to the impact of higher deposit balances. Total noninterest income increased primarily due to favorable market conditions and business growth. Total noninterest expense was flat to the third quarter of 2018 reflecting lower costs related to FDIC assessment and litigation settlements, partially offset by increased net shared services expense due to technology development and higher compensation expense, reflecting the impact of merit increases, increased staffing, and an increase in medical costs. The provision for credit losses increased $4 million reflecting an unfavorable change in the reserve allocation.

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PAYMENT SERVICES (a)
($ in millions)							Percent Change
	3Q 2019		2Q 2019		3Q 2018		3Q19 vs 2Q19			3Q19 vs 3Q18			YTD 2019		YTD 2018		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$634		$591		$619		7.3			2.4			$1,848		$1,821		1.5
Noninterest income		957		950		910		.7			5.2			2,758		2,660		3.7
Securities gains (losses), net		--		--		--		--			--			--		--		--

Total net revenue		1,591		1,541		1,529		3.2			4.1			4,606		4,481		2.8
Noninterest expense		743		730		713		1.8			4.2			2,190		2,116		3.5
Other intangibles		33		33		29		--			13.8			97		84		15.5

Total noninterest expense		776		763		742		1.7			4.6			2,287		2,200		4.0

Income before provision and taxes		815		778		787		4.8			3.6			2,319		2,281		1.7
Provision for credit losses		260		295		264		(11.9	)		(1.5	)		841		817		2.9

Income before income taxes		555		483		523		14.9			6.1			1,478		1,464		1.0
Income taxes and taxable-equivalent adjustment		139		121		131		14.9			6.1			370		367		.8

Net income		416		362		392		14.9			6.1			1,108		1,097		1.0
Net (income) loss attributable to noncontrolling interests		--		--		--		--			--			--		--		--

Net income attributable to U.S. Bancorp		$416		$362		$392		14.9			6.1			$1,108		$1,097		1.0


Average Balance Sheet Data
Loans		$34,044		$33,277		$31,443		2.3			8.3			$33,251		$30,704		8.3
Other earning assets		343		327		266		4.9			28.9			372		281		32.4
Goodwill		2,825		2,806		2,563		.7			10.2			2,815		2,547		10.5
Other intangible assets		550		533		400		3.2			37.5			532		396		34.3
Assets		40,171		39,519		37,125		1.6			8.2			39,432		36,610		7.7
Noninterest-bearing deposits		1,200		1,148		1,064		4.5			12.8			1,168		1,092		7.0
Interest-bearing deposits		117		115		111		1.7			5.4			114		109		4.6

Total deposits		1,317		1,263		1,175		4.3			12.1			1,282		1,201		6.7

Total U.S. Bancorp shareholders’ equity		7,058		7,050		6,583		.1			7.2			7,046		6,602		6.7
(a) preliminary data

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

Payment Services contributed $416 million of the Company’s net income in the third quarter of 2019, compared with $392 million in the third quarter of 2018. Total net revenue increased $62 million (4.1 percent) due to increases of $15 million (2.4 percent) in net interest income and $47 million (5.2 percent) in total noninterest income. Net interest income increased primarily due to growth in loans as well as loan fees, offset by compression on loan rates. Total noninterest income increased year-over-year mainly due to higher credit and debit card revenue primarily driven by processing days, as well as merchant processing services and corporate payment products revenue, both driven by higher sales volumes. Total noninterest expense increased $34 million (4.6 percent) over the third quarter of 2018 principally due to higher net shared services expense to support business growth, technology development and investment in infrastructure, in addition to an increase in personnel expense in support of business development and merit increases. The provision for credit losses decreased $4 million (1.5 percent) reflecting a favorable change in the reserve allocation, partially offset by higher net charge-offs.

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TREASURY AND CORPORATE SUPPORT (a)
($ in millions)									Percent Change
	3Q 2019			2Q 2019			3Q 2018		3Q19 vs 2Q19		3Q19 vs 3Q18		YTD 2019		YTD 2018		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$89			$144			$83		(38.2)		7.2		$315		$269		17.1
Noninterest income		299			266			271		12.4		10.3		826		730		13.2
Securities gains (losses), net		25			17			10		47.1		nm		47		25		88.0

Total net revenue		413			427			364		(3.3)		13.5		1,188		1,024		16.0
Noninterest expense		214			220			176		(2.7)		21.6		632		524		20.6
Other intangibles		--			--			--		--		--		--		--		--

Total noninterest expense		214			220			176		(2.7)		21.6		632		524		20.6

Income before provision and taxes		199			207			188		(3.9)		5.9		556		500		11.2
Provision for credit losses		(3	)		(9	)		(7)		66.7		57.1		23		(5)		nm

Income before income taxes		202			216			195		(6.5)		3.6		533		505		5.5
Income taxes and taxable-equivalent adjustment		(60	)		(47	)		(41)		(27.7)		(46.3)		(202)		(179)		(12.8)

Net income		262			263			236		(.4)		11.0		735		684		7.5
Net (income) loss attributable to noncontrolling interests		(9	)		(7	)		(7)		(28.6)		(28.6)		(25)		(22)		(13.6)

Net income attributable to U.S. Bancorp		$253			$256			$229		(1.2)		10.5		$710		$662		7.3


Average Balance Sheet Data
Loans		$5,979			$5,732			$5,436		4.3		10.0		$5,805		$5,415		7.2
Other earning assets		133,902			129,831			127,247		3.1		5.2		130,314		126,566		3.0
Goodwill		--			--			--		--		--		--		--		--
Other intangible assets		--			--			--		--		--		--		--		--
Assets		159,770			154,830			149,456		3.2		6.9		155,492		148,727		4.5

Noninterest-bearing deposits		2,326			2,411			2,372		(3.5)		(1.9)		2,390		2,441		(2.1)
Interest-bearing deposits		7,635			11,019			2,779		(30.7)		nm		9,303		3,652		nm

Total deposits		9,961			13,430			5,151		(25.8)		93.4		11,693		6,093		91.9

Total U.S. Bancorp shareholders’ equity		21,657			20,767			18,802		4.3		15.2		20,770		18,069		14.9

(a) preliminary data

Treasury and Corporate Support includes the Company’s investment portfolios, funding, capital management, interest rate risk management, income taxes not allocated to the business lines, 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 recorded net income of $253 million in the third quarter of 2019, compared with $229 million in the third quarter of 2018. Total net revenue increased $49 million (13.5 percent) year-over-year driven by increases in net interest income of $6 million (7.2 percent) and $43 million (15.3 percent) in total noninterest income. Net interest income increased year-over-year primarily due to growth in the investment portfolio. Total noninterest income increased year-over-year primarily reflecting higher income from equity investments and gain on the sale of securities. Total noninterest expense increased $38 million (21.6 percent) year-over-year due to higher compensation expense, reflecting the impact of increased staffing and merit increases, and higher implementation costs of capital investments to support business growth. These increases were partially offset by lower net shared services expense and lower costs related to tax-advantaged projects. The provision for credit losses increased $4 million (57.1 percent) reflecting higher net charge-offs.

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