U.S. Bancorp 8K Completes Acquisition of MUFG Union Bank | USB 25 Jan 23

Exhibit 99.1


		U.S. Bancorp Completes Acquisition of MUFG Union Bank Reports Fourth Quarter and Full Year 2022 Results
		• Net income of $1.9 billion and diluted earnings per common share of $1.20, excluding notable items related to the acquisition of MUFG Union Bank for 4Q22
		• Return on average assets of 1.20% and return on average common equity of 16.8%, excluding notable items related to the acquisition of MUFG Union Bank for 4Q22
		• Common Equity Tier 1 capital ratio of 8.4% and strong levels of liquidity

Full Year and 4Q22 Key Financial Data

4Q22 and Full Year Highlights



PROFITABILITY METRICS	4Q22	3Q22	4Q21	Full Year 2022	Full Year 2021
Return on average assets (%)	.59	1.22	1.16	.98	1.43

Return on average common equity (%)	8.0	15.8	13.0	12.6	16.0

Return on tangible common equity (%) (a)	11.5	21.0	16.6	17.0	20.4

Net interest margin (%)	3.01	2.83	2.40	2.72	2.49

Efficiency ratio (%) (a)	63.3	57.5	62.3	61.4	60.4

Tangible efficiency ratio (%) (a)	62.0	56.8	61.6	60.5	59.7
INCOME STATEMENT (b)	4Q22	3Q22	4Q21	Full Year 2022	Full Year 2021
Net interest income (taxable-equivalent basis)	$4,325	$3,857	$3,150	$14,846	$12,600

Noninterest income	$2,043	$2,469	$2,534	$9,456	$10,227

Net income attributable to U.S. Bancorp	$925	$1,812	$1,673	$5,825	$7,963

Diluted earnings per common share	$.57	$1.16	$1.07	$3.69	$5.10

Dividends declared per common share	$.48	$.48	$.46	$1.88	$1.76
BALANCE SHEET (b)	4Q22	3Q22	4Q21	Full Year 2022	Full Year 2021
Average total loans	$359,811	$336,778	$302,755	$333,573	$296,965

Average total deposits	$481,834	$456,769	$449,838	$462,384	$434,281

Net charge-off ratio	.64%	.19%	.17%	.32%	.23%

Book value per common share (period end)	$28.71	$27.39	$32.71

Preliminary Basel III standardized CET1 (c)	8.4%	9.7%	10.0%

(a) See Non-GAAP Financial Measures reconciliation on page 20
(b) Dollars in millions, except per share data
(c) CET1 = Common equity tier 1 capital ratio

4Q22

• Net revenue of $6,368 million including $4,325 million of net interest income and $2,043 million of noninterest income for 4Q22, as reported

• Net income of $1,877 million and diluted earnings per common share of $1.20 for 4Q22, as adjusted for notable items related to the acquisition. On a reported basis, diluted earnings per common share were $0.57

• Reported results included notable items related to the acquisition of MUFG Union Bank, including balance sheet optimization charges of $399 million, merger and integration-related charges of $90 million and impacts to provision for credit losses of $791 million

• Return on average assets of 1.20% and return on average common equity of 16.8% for 4Q22, as adjusted for notable items related to the acquisition. Net income of $925 million, return on average assets of 0.59%. return on average common equity of 8.0%, and return on tangible common equity of 11.5% for 4Q22, on a reported basis

• Average total loan growth of 18.8% year-over-year and 6.8% on a linked quarter basis

• Average total deposit growth of 7.1% year-over-year and 5.5% on a linked quarter basis

Full Year

• Full year positive operating leverage over 230 basis points for legacy U.S. Bancorp operations, excluding notable items and income from the acquisition of MUFG Union Bank

• Full year net income of $5,825 million and diluted earnings per common share of $3.69 as reported, $4.45 excluding notable items from the acquisition of MUFG Union Bank

CEO Commentary

‘‘Full year results, as adjusted, were highlighted by strong pre-provision earnings growth, driven by solid net interest income, wider net interest margin, and positive operating leverage over 230 basis points. On December 1 we completed the acquisition of MUFG Union Bank, which meaningfully increased our market share in California by adding one million consumer, 700 commercial, and 190,000 business banking customers. We expect the transaction to be 8 to 9% accretive to 2023 EPS as the benefits of increased scale, cost synergies, and Union Bank’s core deposit franchise are realized. Credit quality remains strong as we prudently manage with a through-the-cycle view and we continue to maintain healthy capital and liquidity levels given the uncertain economic environment. As of December 31, our common equity tier 1 ratio was 8.4%. I want to thank our dedicated U.S. Bank employees as we continue to work towards a successful systems integration and account conversion of Union Bank customers expected in the second quarter of 2023.”

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

Impact of the MUFG Union Bank Acquisition which closed on December 1, 2022


MUFG UNION BANK ACQUISITION IMPACT HIGHLIGHTS
(Taxable-equivalent basis; $ in millions, except per-share data)
												Net Income Attributable to U.S. Bancorp				Impact on Diluted
Fourth Quarter 2022	USB Legacy		MUFG Union Bank		USB Combined		Notable Items		USB Reported		Fourth Quarter 2022	Before Tax Impact		After Tax Impact		Earnings Per Share
Total net revenue		$6,465		$302		$6,767		$(399)		$6,368	USB Combined		$2,408		$1,877		$1.20
Noninterest expense		3,732		221		3,953		90		4,043
Provision for credit losses		375		26		401		791		1,192	Notable items
Net income attributable to U.S. Bancorp		1,833		44		1,877		(952)		925	Balance sheet optimization		(399)		(297)		(.20)
Diluted earnings per common share		$1.17		$.03		$1.20		$(.63)		$.57	Merger and integration charges		(90)		(67)		(.04)
											Provision for credit losses		(791)		(588)		(.39)
Loans at period end		$335,133		$53,080		$388,213				$388,213	U.S. Bancorp, as reported		$1,128		$925		$.57
Deposits at period end		442,984		81,992		524,976				524,976
Nonperforming assets at period end		687		329		1,016				1,016

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Investor contact: George Andersen, 612.303.3620 | Media contact: Jeff Shelman, 612.303.9933


		U.S. Bancorp Fourth Quarter 2022 Results


MUFG UNION BANK ACQUISITION IMPACT HIGHLIGHTS
($ in millions, except per-share data)
	4Q21	3Q22	4Q22
Income Statement Summary	USB Legacy	USB Legacy	USB Legacy		MUFG Union Bank		USB Combined		Notable Items		USB Reported
Net interest income (taxable-equivalent basis) (a)	$3,150	$3,857		$4,070		$255		$4,325		$ --		$4,325
Noninterest income	2,534	2,469		2,395		47		2,442		(399)		2,043
Total net revenue	5,684	6,326		6,465		302		6,767		(399)		6,368
Noninterest expense	3,533	3,595		3,732		221		3,953		90		4,043
Income before provision and income taxes	2,151	2,731		2,733		81		2,814		(489)		2,325
Provision for credit losses	(13)	362		375		26		401		791		1,192
Income before taxes	2,164	2,369		2,358		55		2,413		(1,280)		1,133
Income taxes and taxable-equivalent adjustment	486	520		520		11		531		(328)		203
Net income	1,678	1,849		1,838		44		1,882		(952)		930
Net (income) loss attributable to noncontrolling interests	(5)	(4)		(5)		--		(5)		--		(5)
Net income attributable to U.S. Bancorp	$1,673	$1,845		$1,833		$44		$1,877		$(952)		$925
Net income applicable to U.S. Bancorp common shareholders	$1,582	$1,751		$1,757		$44		$1,801		$(948)		$853
Diluted earnings per common share	$1.07	$1.18		$1.17		$.03		$1.20		$(.63)		$.57
Return on average assets	1.16%	1.24%		1.23%		.61%		1.20%				.59%
Return on average common equity	13.0%	16.2%		18.1%		4.5%		16.8%				8.0%
Net interest margin (a)	2.40%	2.83%		2.96%		3.87%		3.01%				3.01%
Efficiency ratio (b)	62.3%	56.8%		57.7%		73.2%		58.4%				63.3%
Tangible efficiency ratio (b)	61.6%	56.2%		57.1%		59.3%		57.2%				62.0%

(a) Net of intercompany funding activity between U.S. Bank National Association and MUFG Union Bank

(b) See Non-GAAP Financial Measures reconciliation on page 20


Balance Sheet and Credit Quality Summary As of December 31, 2022	USB Legacy		MUFG Union Bank		USB Reported
Loans		$335,133		$53,080		$388,213
Investment securities		151,169		10,481		161,650
Total assets (a)		593,356		81,449		674,805
Deposits		442,984		81,992		524,976
Allowance for Credit Losses as a Percentage of
Period-end loans		1.96%		1.59%		1.91%
Nonperforming loans		1020%		257%		762%
Nonperforming assets		955%		257%		729%
Nonperforming assets		$687		$329		$1,016

(a) Net of intercompany funding activity between U.S. Bank National Association and MUFG Union Bank

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		U.S. Bancorp Fourth Quarter 2022 Results

On December 1, 2022, the Company completed the acquisition of MUFG Union Bank. As such, the fourth quarter and full year results include one month of results from MUFG Union Bank, the impact of recognizing purchase accounting fair value marks to market and credit related marks to both the balance sheet and the accretion of these purchase accounting adjustments to the income statement in accordance with generally accepted accounting principles.

On a USB Legacy basis, key highlights include the following:

•

Net interest income, on a taxable equivalent basis, increased 29.2 percent from the fourth quarter of 2021 and 5.5 percent on a linked quarter basis

•

Fee revenue declined $139 million, or 5.5 percent, from a year ago primarily driven by lower mortgage banking revenue and service charges, offset by strong growth in payment services revenue and trust and investment management fees

•

Total net revenue increased 12.1 percent from the fourth quarter of 2021 and 2.2 percent on a linked quarter basis

•

Earnings per diluted common share increased 9.3 percent from a year ago while the provision for credit losses increased by $388 million relative to the fourth quarter of a year ago.

MUFG Union Bank contributed $81 million on a pre-provision basis representing one month of results including the impacts of purchase accounting accretion in net interest income and approximately $42 million of intangible amortization primarily related to core deposit intangibles. The acquisition contributed $.03 per diluted common share for the fourth quarter.

Fourth quarter and full year results also include certain notable items directly related to the acquisition. Noninterest income included $399 million of losses primarily related to interest rate hedging positions entered into after regulatory approval was obtained to manage the impact of interest rate volatility on capital prior to closing the transaction in December. During that time, longer term interest rates increased nearly 50 basis points before declining approximately 65 basis points. These interest rate hedges were terminated at closing. In addition, the Company took actions to sell certain loans that were not aligned with our credit risk profile, reposition the investment portfolio and sell certain equity investments. Noninterest expense included $90 million of merger and integration costs primarily reflecting deal closing costs, professional services and employee related costs. The provision for credit losses included charges of $791 million related to initially providing for acquired loans of $662 million and $129 million related to the securitization of approximately $4 billion of indirect automobile loans to optimize the balance sheet capital management.

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		U.S. Bancorp Fourth Quarter 2022 Results


INCOME STATEMENT HIGHLIGHTS
($ in millions, except per-share data)										Percent Change
	4Q 2022			3Q 2022			4Q 2021			4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022			Full Year 2021			Percent Change
Net interest income	$	4,293		$	3,827		$	3,123			12.2			37.5		$	14,728		$	12,494			17.9
Taxable-equivalent adjustment		32			30			27			6.7			18.5			118			106			11.3
Net interest income (taxable-equivalent basis)		4,325			3,857			3,150			12.1			37.3			14,846			12,600			17.8
Noninterest income		2,043			2,469			2,534			(17.3	)		(19.4	)		9,456			10,227			(7.5)
Total net revenue		6,368			6,326			5,684			.7			12.0			24,302			22,827			6.5
Noninterest expense before merger and integration		3,953			3,595			3,533			10.0			11.9			14,577			13,728			6.2
Merger and integration charges		90			42			--			nm			nm			329			--			nm
Total noninterest expense		4,043			3,637			3,533			11.2			14.4			14,906			13,728			8.6
Income before provision and income taxes		2,325			2,689			2,151			(13.5	)		8.1			9,396			9,099			3.3
Provision for credit losses		1,192			362			(13	)		nm			nm			1,977			(1,173	)		nm
Income before taxes		1,133			2,327			2,164			(51.3	)		(47.6	)		7,419			10,272			(27.8)
Income taxes and taxable-equivalent adjustment		203			511			486			(60.3	)		(58.2	)		1,581			2,287			(30.9)
Net income		930			1,816			1,678			(48.8	)		(44.6	)		5,838			7,985			(26.9)
Net (income) loss attributable to noncontrolling interests		(5	)		(4	)		(5	)		(25.0	)		--			(13	)		(22	)		40.9
Net income attributable to U.S. Bancorp		$925		$	1,812		$	1,673			(49.0	)		(44.7	)	$	5,825		$	7,963			(26.8)
Net income applicable to U.S. Bancorp common shareholders		$853		$	1,718		$	1,582			(50.3	)		(46.1	)	$	5,501		$	7,605			(27.7)
Diluted earnings per common share		$.57		$	1.16		$	1.07			(50.9	)		(46.7	)	$	3.69		$	5.10			(27.6)

Net income attributable to U.S. Bancorp was $925 million for the fourth quarter of 2022, which was $748 million lower than the $1,673 million for the fourth quarter of 2021 and $887 million lower than the $1,812 million for the third quarter of 2022. Diluted earnings per common share were $0.57 in the fourth quarter of 2022, compared with $1.07 in the fourth quarter of 2021 and $1.16 in the third quarter of 2022. The fourth quarter of 2022 included $(952) million, or $(0.63) per diluted common share, of notable items associated with the acquisition of MUFG Union Bank including the impact of certain transactions to support balance sheet optimization, merger and integration-related charges and the initial provision for credit losses, compared with $(0.02) per diluted common share of merger and integration-related charges in the third quarter of 2022.

The decrease in net income year-over-year was primarily due to the notable items. Pretax income excluding the notable items increased 11.5 percent compared with a year ago including $55 million of contribution from MUFG Union Bank. Net interest income increased 37.3 percent on a year-over-year taxable-equivalent basis due to the impact of rising interest rates on earning assets and strong growth in loan balances including the impacts of the MUFG Union Bank acquisition, partially offset by deposit mix and pricing as well as funding mix. The net interest margin increased to 3.01 percent in the current quarter from 2.40 percent in the fourth quarter of 2021 primarily due to the impact of higher rates on earning assets, partially offset by deposit pricing and short-term borrowing costs. Excluding the impact of notable items, noninterest income decreased 3.6 percent compared with a year ago driven by lower mortgage banking revenue due to a decline in refinancing activities, partially offset by higher payment services revenue and trust and investment management fees. The increase also reflects $47 million of fee income related to MUFG Union Bank. Excluding merger and integration-related charges, noninterest expense increased 11.9 percent driven by MUFG Union Bank operating expenses of $221 million, including core deposit intangible amortization expense and higher legacy compensation expense. Provision for credit losses reflected the initial provision for credit losses related to the acquisition of MUFG Union Bank and a reserve build in the fourth quarter of 2022 as compared with a reserve release in the fourth quarter of 2021, primarily driven by increasing economic uncertainty.

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		U.S. Bancorp Fourth Quarter 2022 Results

Net income decreased on a linked quarter basis primarily due to the notable items. Pretax income excluding the notable items increased 1.9 percent on a linked quarter basis including $55 million of contribution from MUFG Union Bank. Net interest income increased 12.1 percent on a taxable-equivalent basis due to yield curve favorability, growth in loan balances including the impacts of the MUFG Union Bank acquisition and earning asset mix, partially offset by deposit mix and pricing as well as funding mix. The net interest margin increased to 3.01 percent in the current quarter from 2.83 percent in the third quarter of 2022 primarily due to the impact of higher rates on earning assets and loan growth, partially offset by deposit pricing and short-term borrowing costs. Excluding the impact of notable items, noninterest income decreased 1.1 percent compared with the third quarter of 2022 driven by seasonally lower payment services revenue, impacted by foreign currency exchange rates in Europe, and lower commercial products revenue, partially offset by higher mortgage banking revenue. Excluding merger and integration-related charges, noninterest expense increased 10.0 percent on a linked quarter basis driven by MUFG Union Bank operating expenses, core deposit intangible amortization expense and higher legacy Company compensation expense. Provision for credit losses increased driven by the initial provision for credit losses related to the acquisition of MUFG Union Bank along with increasing economic uncertainty.

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		U.S. Bancorp Fourth Quarter 2022 Results


NET INTEREST INCOME
(Taxable-equivalent basis; $ in millions)							Change
	4Q 2022		3Q 2022		4Q 2021		4Q22 vs 3Q22		4Q22 vs 4Q21		Full Year 2022		Full Year 2021		Change
Components of net interest income
Income on earning assets		$6,008		$4,759		$3,382		$1,249		$2,626		$18,066		$13,593		$4,473
Expense on interest-bearing liabilities		1,683		902		232		781		1,451		3,220		993		2,227
Net interest income		$4,325		$3,857		$3,150		$468		$1,175		$14,846		$12,600		$2,246

Average yields and rates paid
Earning assets yield		4.17%		3.50%		2.58%		.67%		1.59%		3.31%		2.69%		.62%
Rate paid on interest-bearing liabilities		1.55		.89		.25		.66		1.30		.80		.28		.52
Gross interest margin		2.62%		2.61%		2.33%		.01%		.29%		2.51%		2.41%		.10%
Net interest margin		3.01%		2.83%		2.40%		.18%		.61%		2.72%		2.49%		.23%

Average balances
Investment securities (a)		$166,993		$164,851		$160,784		$2,142		$6,209		$169,442		$154,702		$14,740
Loans		359,811		336,778		302,755		23,033		57,056		333,573		296,965		36,608
Interest-bearing deposits with banks		35,565		29,130		45,751		6,435		(10,186)		31,425		39,914		(8,489)
Earning assets		572,678		541,666		522,535		31,012		50,143		545,343		506,141		39,202
Interest-bearing liabilities		430,600		403,573		363,880		27,027		66,720		400,844		358,533		42,311

(a) Excludes unrealized gain (loss)

Net interest income on a taxable-equivalent basis in the fourth quarter of 2022 was $4,325 million, an increase of $1,175 million (37.3 percent) over the fourth quarter of 2021. The increase was primarily due to the impact of rising interest rates on earning assets, growth in the Company’s legacy loan portfolio and the MUFG Union Bank acquisition, partially offset by deposit pricing and short-term borrowing costs. Average earning assets were $50.1 billion (9.6 percent) higher than the fourth quarter of 2021, reflecting increases of $57.1 billion (18.8 percent) in average total loans and $6.2 billion (3.9 percent) in average investment securities, while average interest-bearing deposits with banks decreased $10.2 billion (22.3 percent) driven by the growth in loan and investment securities balances. The increase in average investment securities year-over-year was due to the acquisition of MUFG Union Bank as well as purchases of mortgage-backed, U.S. Treasury and state and political securities, net of prepayments, sales and maturities in the Company’s legacy portfolio.

Net interest income on a taxable-equivalent basis increased $468 million (12.1 percent) on a linked quarter basis primarily due to yield curve favorability, growth in loan balances including the impacts of the MUFG Union Bank acquisition and earning asset mix, partially offset by deposit mix and pricing as well as short-term borrowing costs. Average earning assets were $31.0 billion (5.7 percent) higher on a linked quarter basis, reflecting increases of $23.0 billion (6.8 percent) in average loans, $2.1 billion (1.3 percent) in average investment securities and $6.4 billion (22.1 percent) in average interest-bearing deposits with banks. The increase in average investment securities on a linked quarter basis was primarily due to the acquisition of MUFG Union Bank.

The net interest margin in the fourth quarter of 2022 was 3.01 percent, compared with 2.40 percent in the fourth quarter of 2021 and 2.83 percent in the third quarter of 2022. The increase in the net interest margin from the prior year was primarily due to the impact of higher rates on earning assets, partially offset by deposit pricing and short-term borrowing costs. The increase in the net interest margin on a linked quarter basis reflected the impact of rising interest rates on earning assets and loan growth, partially offset by deposit pricing and short-term borrowing costs.

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		U.S. Bancorp Fourth Quarter 2022 Results


AVERAGE LOANS
($ in millions)							Percent Change
	4Q 2022		3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022		Full Year 2021		Percent Change

Commercial		$128,269		$123,745		$99,433		3.7			29.0		$	118,967	$	97,649		21.8
Lease financing		4,649		4,774		5,075		(2.6	)		(8.4	)		4,830		5,206		(7.2	)
Total commercial		132,918		128,519		104,508		3.4			27.2			123,797		102,855		20.4

Commercial mortgages		34,997		30,002		28,216		16.6			24.0			30,890		27,997		10.3
Construction and development		10,725		10,008		10,635		7.2			.8			10,208		10,784		(5.3	)
Total commercial real estate		45,722		40,010		38,851		14.3			17.7			41,098		38,781		6.0

Residential mortgages		97,092		84,018		75,858		15.6			28.0			84,749		74,629		13.6

Credit card		25,173		24,105		22,399		4.4			12.4			23,478		21,645		8.5

Retail leasing		5,774		6,259		7,354		(7.7	)		(21.5	)		6,459		7,710		(16.2	)
Home equity and second mortgages		11,927		11,142		10,568		7.0			12.9			11,051		11,228		(1.6	)
Other		41,205		42,725		43,217		(3.6	)		(4.7	)		42,941		40,117		7.0
Total other retail		58,906		60,126		61,139		(2.0	)		(3.7	)		60,451		59,055		2.4

Total loans		$359,811		$336,778		$302,755		6.8			18.8		$	333,573	$	296,965		12.3

Average total loans for the fourth quarter of 2022 were $57.1 billion (18.8 percent) higher than the fourth quarter of 2021. The increase was driven by growth in the Company’s legacy loan portfolio as well as the $18.3 billion impact on average loan balances from the MUFG Union Bank acquisition which are primarily reflected in commercial loans, commercial mortgages and residential mortgages. Increases in commercial loans (29.0 percent), commercial mortgages (24.0 percent), residential mortgages (28.0 percent) and credit card loans (12.4 percent) were partially offset by lower retail leasing balances (21.5 percent) and other retail loans (4.7 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 refinance activity. The increase in credit card loans was primarily driven by higher spend volumes, account growth and lower payment rates.

Average total loans were $23.0 billion (6.8 percent) higher than the third quarter of 2022 primarily due to the $18.3 billion impact of the MUFG Union Bank acquisition as well as legacy portfolio growth. Increases in commercial loans (3.7 percent), total commercial real estate (14.3 percent) and residential mortgages (15.6 percent) were primarily driven by the MUFG Union Bank acquisition, while the increase in credit card loans (4.4 percent) was primarily driven by lower payment rates.

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		U.S. Bancorp Fourth Quarter 2022 Results


AVERAGE DEPOSITS
($ in millions)							Percent Change
	4Q		3Q		4Q		4Q22 vs			4Q22 vs			Full Year		Full Year		Percent
	2022		2022		2021		3Q22			4Q21			2022		2021		Change

Noninterest-bearing deposits	$	118,912	$	114,044	$	135,936		4.3			(12.5	)	$	120,394	$	127,204		(5.4	)
Interest-bearing savings deposits
Interest checking		124,522		113,364		108,889		9.8			14.4			117,471		103,198		13.8
Money market savings		135,949		125,389		117,462		8.4			15.7			126,221		117,093		7.8
Savings accounts		67,991		67,782		64,763		.3			5.0			67,722		62,294		8.7
Total savings deposits		328,462		306,535		291,114		7.2			12.8			311,414		282,585		10.2
Time deposits		34,460		36,190		22,788		(4.8	)		51.2			30,576		24,492		24.8
Total interest-bearing deposits		362,922		342,725		313,902		5.9			15.6			341,990		307,077		11.4

Total deposits	$	481,834	$	456,769	$	449,838		5.5			7.1		$	462,384	$	434,281		6.5

Average total deposits for the fourth quarter of 2022 were $32.0 billion (7.1 percent) higher than the fourth quarter of 2021 driven in part by the $28.6 billion impact of the MUFG Union Bank acquisition. Average noninterest-bearing deposits decreased $17.0 billion (12.5 percent) across all business lines, net of the impact of the acquisition. Average total savings deposits were $37.3 billion (12.8 percent) higher year-over-year driven by Corporate and Commercial Banking and the impact of the acquisition. Average time deposits were $11.7 billion (51.2 percent) higher than the prior year quarter mainly 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.

Average total deposits grew $25.1 billion (5.5 percent) from the third quarter of 2022 reflecting the $28.6 billion impact of the MUFG Union Bank acquisition. On a linked quarter basis, average noninterest-bearing deposits increased $4.9 billion (4.3 percent) primarily driven by Consumer and Business Banking as a result of the acquisition. Average total savings deposits increased $21.9 billion (7.2 percent) primarily within Corporate and Commercial Banking, Wealth Management and Investment Services and Consumer and Business Banking driven by the acquisition. Average time deposits were $1.7 billion (4.8 percent) lower on a linked quarter basis mainly 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.

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		U.S. Bancorp Fourth Quarter 2022 Results


NONINTEREST INCOME
($ in millions)								Percent Change
	4Q 2022			3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022			Full Year 2021		Percent Change

Card revenue		$384			$391		$382		(1.8	)		.5			$1,512			$1,507		.3
Corporate payment products revenue		178			190		155		(6.3	)		14.8			698			575		21.4
Merchant processing services		385			406		365		(5.2	)		5.5			1,579			1,449		9.0
Trust and investment management fees		571			572		483		(.2	)		18.2			2,209			1,832		20.6
Service charges		314			317		345		(.9	)		(9.0	)		1,298			1,338		(3.0	)
Commercial products revenue		264			285		265		(7.4	)		(.4	)		1,105			1,102		.3
Mortgage banking revenue		104			81		298		28.4			(65.1	)		527			1,361		(61.3	)
Investment products fees		58			56		62		3.6			(6.5	)		235			239		(1.7	)
Securities gains (losses), net		--			1		15		nm			nm			38			103		(63.1	)
Other		184			170		164		8.2			12.2			654			721		(9.3	)
Total before balance sheet optimization		2,442			2,469		2,534		(1.1	)		(3.6	)		9,855			10,227		(3.6	)
Balance sheet optimization		(399	)		--		--		nm			nm			(399	)		--		nm

Total noninterest income	$	2,043		$	2,469	$	2,534		(17.3	)		(19.4	)	$	9,456		$	10,227		(7.5	)

Fourth quarter noninterest income of $2,043 million was $491 million (19.4 percent) lower than the fourth quarter of 2021, reflecting $(399) million of balance sheet optimization impact related to the MUFG Union Bank acquisition. Excluding the balance sheet optimization impact, fourth quarter noninterest income was $92 million (3.6 percent) lower than the fourth quarter of 2021 driven by lower mortgage banking revenue due to a decline in refinancing activities as well as lower service charges, partially offset by stronger payment services revenue and trust and investment management fees. Mortgage banking revenue decreased $194 million (65.1 percent) reflecting lower application volume, given declining refinance activities experienced in the mortgage industry, lower related gain on sale margins and fewer sales of performing loans, partially offset by a favorable change in the valuation of mortgage servicing rights, net of hedging activities. Service charges decreased $31 million (9.0 percent) primarily due to the impact of the elimination of certain consumer overdraft fees in 2022. These decreases in noninterest income were partially offset by an increase of $45 million (5.0 percent) in payment services revenue compared with the fourth quarter of 2021. Corporate payment products revenue increased $23 million (14.8 percent) driven by improving business spending across all product groups and merchant processing services revenue increased $20 million (5.5 percent) driven by higher sales volume and higher merchant fees. Given continued uncertainties in Europe, the U.S. dollar has strengthened considerably compared to European currencies. Adjusted for the impact of foreign currency rate changes, year-over-year merchant processing services revenue increased approximately 11.2 percent. Trust and investment management fees increased $88 million (18.2 percent) driven by lower money market fund fee waivers and activity related to the fourth quarter of 2021 acquisition of PFM Asset Management LLC, partially offset by unfavorable market conditions.

Noninterest income was $426 million (17.3 percent) lower in the fourth quarter of 2022 compared with the third quarter of 2022, reflecting $(399) million of balance sheet optimization related to the MUFG Union Bank acquisition. Excluding the balance sheet optimization impact, fourth quarter noninterest income was $27 million (1.1 percent) lower than the third quarter of 2022 reflecting seasonally lower payment services revenue and lower commercial products revenue, partially offset by higher mortgage banking revenue and other noninterest income. Payment services revenue decreased $40 million (4.1 percent). Card revenue decreased $7 million (1.8 percent) due to lower net interchange rate. Corporate payment products revenue decreased $12 million (6.3 percent) primarily due to seasonally lower sales volume. Merchant processing services revenue decreased $21 million (5.2 percent) primarily due to lower sales volume and lower merchant fees. Commercial products revenue decreased $21 million (7.4 percent) driven by lower capital markets and foreign currency customer activity as well as lower trading revenue, partially offset by higher non-yield loan fees as a result of higher commitment fees, higher commercial leasing fees and activity related to the acquisition of MUFG Union Bank. Partially offsetting these decreases, mortgage banking revenue increased $23 million (28.4 percent) reflecting an increase in the fair value of mortgage servicing rights, net of hedging activities, and other noninterest income increased $14 million (8.2 percent) due to higher tax-advantaged investment syndication revenue, partially offset by higher gains on the sale of certain assets in the third quarter of 2022.

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		U.S. Bancorp Fourth Quarter 2022 Results


NONINTEREST EXPENSE
($ in millions)							Percent Change
	4Q 2022		3Q 2022		4Q 2021		4Q22 vs 3Q22		4Q22 vs 4Q21		Full Year 2022		Full Year 2021		Percent Change

Compensation and employee benefits	$	2,402	$	2,260	$	2,223		6.3		8.1	$	9,157	$	8,728		4.9
Net occupancy and equipment		290		272		268		6.6		8.2		1,096		1,048		4.6
Professional services		173		131		160		32.1		8.1		529		492		7.5
Marketing and business development		144		126		129		14.3		11.6		456		366		24.6
Technology and communications		459		427		443		7.5		3.6		1,726		1,728		(.1	)
Other intangibles		85		43		40		97.7		nm		215		159		35.2
Other		400		336		270		19.0		48.1		1,398		1,207		15.8
Total before merger and integration		3,953		3,595		3,533		10.0		11.9		14,577		13,728		6.2
Merger and integration charges		90		42		--		nm		nm		329		--		nm

Total noninterest expense	$	4,043	$	3,637	$	3,533		11.2		14.4	$	14,906	$	13,728		8.6

Fourth quarter noninterest expense of $4,043 million was $510 million (14.4 percent) higher than the fourth quarter of 2021. Included in the fourth quarter of 2022 were merger and integration-related charges associated with the acquisition of MUFG Union Bank of $90 million. Excluding the fourth quarter merger and integration-related charges, fourth quarter noninterest expense increased $420 million (11.9 percent) compared with the fourth quarter of 2021, driven by the impact of MUFG Union Bank operating expenses, core deposit intangible amortization expense, higher legacy Company compensation expense and higher other noninterest expense. Compensation expense increased $179 million (8.1 percent) compared with the fourth quarter of 2021 primarily due to MUFG Union Bank expense as well as merit and hiring to support business growth and lower capitalized loan costs driven by lower mortgage production, partially offset by lower performance-based incentives. Intangible amortization increased $45 million driven by the core deposit intangible created as a result of the MUFG Union Bank acquisition. Other noninterest expense increased $130 million (48.1 percent) due to lower prior year accruals related to future delivery exposures for merchant and airline processing and other liabilities, higher FDIC insurance expense driven by an increase in the assessment base and rate and MUFG Union Bank expense, partially offset by lower costs related to tax-advantaged projects and expenses related to the decline in mortgage production.

Noninterest expense increased $406 million (11.2 percent) on a linked quarter basis. Excluding merger and integration-related charges of $90 million in the fourth quarter of 2022 and $42 million in the third quarter of 2022, fourth quarter noninterest expense increased $358 million (10.0 percent) driven by the impact of MUFG Union Bank operating expenses, core deposit intangible amortization, higher legacy Company compensation expense and other noninterest expense. Compensation expense increased $142 million (6.3 percent) primarily due to MUFG Union Bank expense, higher performance-based incentives and lower capitalized loan costs driven by lower mortgage production, partially offset by lower variable compensation. Intangible amortization increased $42 million (97.7 percent) driven by the core deposit intangible created as a result of the MUFG Union Bank acquisition. Other noninterest expense increased $64 million (19.0 percent) due to MUFG Union Bank expense, higher costs related to tax-advantaged projects, higher FDIC insurance expense driven by an increase in the assessment base and rate, and other accrued liabilities.

Provision for Income Taxes

The provision for income taxes for the fourth quarter of 2022 resulted in a tax rate of 17.9 percent on a taxable-equivalent basis (effective tax rate of 15.5 percent), compared with 22.5 percent on a taxable-equivalent basis (effective tax rate of 21.5 percent) in the fourth quarter of 2021, and a tax rate of 22.0 percent on a taxable-equivalent basis (effective tax rate of 20.9 percent) in the third quarter of 2022. The tax rate on a taxable-equivalent basis, was 22.0 percent excluding the impact of notable items related to the acquisition.

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		U.S. Bancorp Fourth Quarter 2022 Results


ALLOWANCE FOR CREDIT LOSSES
($ in millions)	4Q 2022			% (a)		3Q 2022			% (a)		2Q 2022			% (a)		1Q 2022			% (a)		4Q 2021			% (a)
Balance, beginning of period	$	6,455				$	6,255				$	6,105				$	6,155				$	6,300
Allowance for acquired credit losses (b)		336					--					--					--					--
Net charge-offs USB Combined		210			.23		162			.19		161			.20		162			.21		132			.17
Acquisition impact (c)		368					--					--					--					--

Total net charge-offs		578			.64		162			.19		161			.20		162			.21		132			.17
Provision for credit losses
USB Combined		401					362					311					112					(13	)
Balance sheet optimization impact		129					--					--					--					--
Acquisition impact of initial provision		662					--					--					--					--

Total provision for credit losses		1,192					362					311					112					(13	)
Other changes		(1	)				--					--					--					--

Balance, end of period	$	7,404				$	6,455				$	6,255				$	6,105				$	6,155

Components
Allowance for loan losses	$	6,936				$	6,017				$	5,832				$	5,664				$	5,724
Liability for unfunded credit commitments		468					438					423					441					431

Total allowance for credit losses	$	7,404				$	6,455				$	6,255				$	6,105				$	6,155

Allowance for credit losses as a percentage of
Period-end loans		1.91	%				1.88	%				1.88	%				1.91	%				1.97	%
Nonperforming loans		762	%				1,025	%				863	%				798	%				738	%
Nonperforming assets		729	%				953	%				812	%				753	%				701	%

(a) Annualized and calculated on average loan balances (b) Allowance for credit deteriorated and charged-off loans acquired from MUFG Union Bank (c) Includes net charge-offs of $179 million, reflecting uncollectible acquired loans previously charged-off and acquisition alignment, and $189 million loss on balance sheet optimization


SUMMARY OF NET CHARGE-OFFS
($ in millions)	4Q 2022			% (a)			3Q 2022			% (a)			2Q 2022			% (a)			1Q 2022			% (a)			4Q 2021			% (a)
Net charge-offs
Commercial	$	133			.41		$	24			.08		$	28			.10		$	26			.10		$	6			.02
Lease financing		5			.43			3			.25			2			.16			6			.49			--			--

Total commercial		138			.41			27			.08			30			.10			32			.12			6			.02
Commercial mortgages		25			.28			(6	)		(.08	)		(2	)		(.03	)		--			--			(3	)		(.04	)
Construction and development		17			.63			--			--			8			.33			(5	)		(.20	)		(1	)		(.04	)

Total commercial real estate		42			.36			(6	)		(.06	)		6			.06			(5	)		(.05	)		(4	)		(.04	)
Residential mortgages		(3	)		(.01	)		(5	)		(.02	)		(9	)		(.04	)		(6	)		(.03	)		(7	)		(.04	)

Credit card		175			2.76			119			1.96			118			2.08			112			2.08			109			1.93

Retail leasing		1			.07			1			.06			--			--			1			.06			1			.05
Home equity and second mortgages		--			--			(2	)		(.07	)		(3	)		(.11	)		(2	)		(.08	)		(2	)		(.08	)
Other		225			2.17			28			.26			19			.17			30			.27			29			.27

Total other retail		226			1.52			27			.18			16			.11			29			.19			28			.18

Total net charge-offs	$	578			.64		$	162			.19		$	161			.20		$	162			.21		$	132			.17

Gross charge-offs	$	669					$	275					$	276					$	280					$	254
Gross recoveries	$	91					$	113					$	115					$	118					$	122

(a) Annualized and calculated on average loan balances

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		U.S. Bancorp Fourth Quarter 2022 Results

The Company’s provision for credit losses for the fourth quarter of 2022 was $1,192 million, compared with a provision of $362 million in the third quarter of 2022 and a credit benefit of $13 million in the fourth quarter of 2021. The increase in provision was primarily due to the initial provision for credit losses recorded in the fourth quarter of 2022 of $662 million related to the MUFG Union Bank acquisition and the provision impact of balance sheet optimization actions taken in the fourth quarter of $129 million as well as changing economic conditions. During 2021, factors affecting economic conditions, including government stimulus and declining impacts from the pandemic in the U.S., contributed to economic improvement and related reserve releases. In 2022, economic uncertainty and recession risk have been increasing due to ongoing supply chain challenges, inflationary concerns, market volatility, rising oil prices from the Russia-Ukraine conflict 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. Generally, these credit quality factors continue to perform better than pre-pandemic levels despite the changing economic outlook. Consumer portfolios remain resilient despite rising delinquencies and lower collateral values. We anticipate some stress in commercial portfolios as the impact of rising interest rates filters through financials.

Total net charge-offs in the fourth quarter of 2022 were $578 million, compared with $162 million in the third quarter of 2022 and $132 million in the fourth quarter of 2021. Net charge-offs for the fourth quarter included $179 million of uncollectible acquired loans previously charged-off and acquisition alignment, and $189 million of losses on balance sheet optimization. The net charge-off ratio was 0.64 percent in the fourth quarter of 2022 (0.23 percent excluding the impact of the MUFG Union Bank acquisition-related items noted above), compared with 0.19 percent in the third quarter of 2022 and 0.17 percent in the fourth quarter of 2021. Net charge-offs, excluding the impact of the MUFG Union Bank acquisition-related items noted above, increased $48 million (29.6 percent) compared with the third quarter of 2022 and $78 million (59.1 percent) compared with the fourth quarter of 2021, reflecting higher charge-offs in most loan categories consistent with normalizing credit conditions.

The allowance for credit losses was $7,404 million at December 31, 2022, compared with $6,455 million at September 30, 2022, and $6,155 million at December 31, 2021. The allowance for credit losses at December 31, 2022, included the impact of MUFG Union Bank’s initial provision for credit losses of $662 million and $336 million of initial allowance recorded through purchase accounting. The increase on a linked quarter basis was driven by the MUFG Union Bank acquisition, and increasing economic uncertainty. The ratio of the allowance for credit losses to period-end loans was 1.91 percent at December 31, 2022, compared with 1.88 percent at September 30, 2022, and 1.97 percent at December 31, 2021. The ratio of the allowance for credit losses to nonperforming loans was 762 percent at December 31, 2022, compared with 1,025 percent at September 30, 2022, and 738 percent at December 31, 2021.

Nonperforming assets were $1,016 million at December 31, 2022, and included $329 million acquired from MUFG Union Bank. Nonperforming assets were $677 million at September 30, 2022, and $878 million at December 31, 2021. The ratio of nonperforming assets to loans and other real estate was 0.26 percent at December 31, 2022, compared with 0.20 percent at September 30, 2022, and 0.28 percent at December 31, 2021. The year-over-year and linked quarter increases in nonperforming assets reflected nonperforming assets acquired from MUFG Union Bank. The year-over-year increase was partially offset by decreases across all loan categories within the legacy portfolios, with the largest drivers in total commercial and total commercial real estate nonperforming loans. Accruing loans 90 days or more past due were $491 million at December 31, 2022, and included $22 million of accruing loans 90 days or more past due acquired from MUFG Union Bank, compared with $393 million at September 30, 2022, and $472 million at December 31, 2021.

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		U.S. Bancorp Fourth Quarter 2022 Results


DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES
(Percent)	Dec 31 2022		Sep 30 2022		Jun 30 2022		Mar 31 2022		Dec 31 2021

Delinquent loan ratios - 90 days or more past due
Commercial		.07		.03		.07		.06		.04
Commercial real estate		.01		.05		.01		--		.03
Residential mortgages		.08		.10		.12		.18		.24
Credit card		.88		.74		.69		.74		.73
Other retail		.12		.11		.10		.11		.11
Total loans		.13		.11		.13		.14		.15

Delinquent loan ratios - 90 days or more past due and nonperforming loans
Commercial		.19		.12		.19		.21		.20
Commercial real estate		.62		.46		.53		.55		.76
Residential mortgages		.36		.35		.40		.45		.53
Credit card		.88		.74		.69		.74		.73
Other retail		.37		.32		.35		.37		.35
Total loans		.38		.30		.35		.38		.42


ASSET QUALITY (a)
($ in millions)

	Dec 31 2022		Sep 30 2022		Jun 30 2022		Mar 31 2022		Dec 31 2021
Nonperforming loans
Commercial		$139		$92		$116		$139		$139
Lease financing		30		30		32		35		35
Total commercial		169		122		148		174		174
Commercial mortgages		251		110		147		178		213
Construction and development		87		57		59		38		71
Total commercial real estate		338		167		206		216		284
Residential mortgages		325		211		223		214		226
Credit card		1		--		--		--		--
Other retail		139		130		148		161		150
Total nonperforming loans		972		630		725		765		834
Other real estate		23		24		23		23		22
Other nonperforming assets		21		23		22		23		22
Total nonperforming assets		$1,016		$677		$770		$811		$878

Accruing loans 90 days or more past due		$491		$393		$423		$450		$472

Nonperforming assets to loans plus ORE (%)		.26		.20		.23		.25		.28

(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 Fourth Quarter 2022 Results


COMMON SHARES
(Millions)	4Q 2022		3Q 2022		2Q 2022		1Q 2022			4Q 2021
Beginning shares outstanding		1,486		1,486		1,486		1,484			1,483
Shares issued for stock incentive plans, acquisitions and other corporate purposes		45		--		--		3			1
Shares repurchased		--		--		--		(1	)		--

Ending shares outstanding		1,531		1,486		1,486		1,486			1,484


CAPITAL POSITION										Preliminary Data
($ in millions)	Dec 31 2022			Sep 30 2022			Jun 30 2022			Mar 31 2022			Dec 31 2021

Total U.S. Bancorp shareholders’ equity	$	50,766		$	47,513		$	48,605		$	51,200		$	54,918

Basel III Standardized Approach (a)
Common equity tier 1 capital	$	41,560		$	44,094		$	42,944		$	41,950		$	41,701
Tier 1 capital		48,813			51,346			50,195			49,198			48,516
Total risk-based capital		59,015			60,738			58,307			57,403			56,250

Common equity tier 1 capital ratio		8.4	%		9.7	%		9.7	%		9.8	%		10.0	%
Tier 1 capital ratio		9.8			11.2			11.4			11.5			11.6
Total risk-based capital ratio		11.9			13.3			13.2			13.4			13.4
Leverage ratio		7.9			8.7			8.6			8.6			8.6

Tangible common equity to tangible assets (b)		4.5			5.2			5.5			6.0			6.8
Tangible common equity to risk-weighted assets (b)		6.0			6.7			7.2			8.0			9.2

Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)		8.1			9.4			9.4			9.5			9.6

(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 20

Total U.S. Bancorp shareholders’ equity was $50.8 billion at December 31, 2022, compared with $47.5 billion at September 30, 2022, and $54.9 billion at December 31, 2021. 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 MUFG Union Bank’s core regional banking franchise. The Company does not expect to commence repurchasing its common stock until its CET1 ratio approximates 9.0 percent.

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 8.4 percent at December 31, 2022, compared with 9.7 percent at September 30, 2022, and 10.0 percent at December 31, 2021. The common equity tier 1 capital to risk-weighted assets ratio, reflecting the full implementation of the current expected credit losses methodology was 8.1 percent at December 31, 2022, compared with 9.4 percent at September 30, 2022, and 9.6 percent at December 31, 2021.

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		U.S. Bancorp Fourth Quarter 2022 Results

Investor Conference Call

On Wednesday, January 25, 2023 at 8 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 PIN code for all participants is 6030554. For those unable to participate during the live call, a replay will be available at approximately 11 a.m. CT on Wednesday, January 25, 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 $675 billion in assets as of December 31, 2022, 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. MUFG Union Bank, consisting primarily of retail banking branches on the West Coast, joined U.S. Bancorp in 2022. The company has been recognized for its approach to digital innovation, social responsibility, and customer service, including being named one of the 2022 World’s Most Ethical Companies and Fortune’s most admired superregional bank. Learn more at usbank.com/about.

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;

•

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;

•

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 or security systems or infrastructure, or those of third parties;

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		U.S. Bancorp Fourth Quarter 2022 Results

•

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, 2021, and subsequent filings with the Securities and Exchange Commission.

In addition, U.S. Bancorp’s acquisition of MUFG Union Bank 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 MUFG Union Bank with U.S. Bancorp, including the integration of MUFG Union Bank, 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.

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		U.S. Bancorp Fourth Quarter 2022 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, tangible 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 return on tangible common equity and adjusted diluted earnings per common share exclude notable items related to the acquisition of MUFG Union Bank. 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.

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CONSOLIDATED STATEMENT OF INCOME
	Three Months Ended						Year Ended
(Dollars and Shares in Millions, Except Per Share Data)	December 31,						December 31,
(Unaudited)	2022			2021			2022			2021
Interest Income
Loans		$4,532			$2,635			$13,603			$10,747
Loans held for sale		38			56			201			232
Investment securities		988			624			3,378			2,365
Other interest income		416			40			763			143
Total interest income		5,974			3,355			17,945			13,487
Interest Expense
Deposits		1,081			75			1,872			320
Short-term borrowings		318			18			565			70
Long-term debt		282			139			780			603
Total interest expense		1,681			232			3,217			993
Net interest income		4,293			3,123			14,728			12,494
Provision for credit losses		1,192			(13	)		1,977			(1,173	)
Net interest income after provision for credit losses		3,101			3,136			12,751			13,667
Noninterest Income
Card revenue		384			382			1,512			1,507
Corporate payment products revenue		178			155			698			575
Merchant processing services		385			365			1,579			1,449
Trust and investment management fees		571			483			2,209			1,832
Service charges		314			345			1,298			1,338
Commercial products revenue		264			265			1,105			1,102
Mortgage banking revenue		104			298			527			1,361
Investment products fees		58			62			235			239
Securities gains (losses), net		(18	)		15			20			103
Other		(197	)		164			273			721
Total noninterest income		2,043			2,534			9,456			10,227
Noninterest Expense
Compensation and employee benefits		2,402			2,223			9,157			8,728
Net occupancy and equipment		290			268			1,096			1,048
Professional services		173			160			529			492
Marketing and business development		144			129			456			366
Technology and communications		459			443			1,726			1,728
Other intangibles		85			40			215			159
Merger and integration charges		90			--			329			--
Other		400			270			1,398			1,207
Total noninterest expense		4,043			3,533			14,906			13,728
Income before income taxes		1,101			2,137			7,301			10,166
Applicable income taxes		171			459			1,463			2,181
Net income		930			1,678			5,838			7,985
Net (income) loss attributable to noncontrolling interests		(5	)		(5	)		(13	)		(22	)
Net income attributable to U.S. Bancorp		$925			$1,673			$5,825			$7,963
Net income applicable to U.S. Bancorp common shareholders		$853			$1,582			$5,501			$7,605
Earnings per common share		$.57			$1.07			$3.69			$5.11
Diluted earnings per common share		$.57			$1.07			$3.69			$5.10
Dividends declared per common share		$.48			$.46			$1.88			$1.76
Average common shares outstanding		1,501			1,483			1,489			1,489
Average diluted common shares outstanding		1,501			1,484			1,490			1,490


CONSOLIDATED ENDING BALANCE SHEET

(Dollars in Millions)	December 31, 2022			December 31, 2021
Assets
Cash and due from banks		$53,542			$28,905
Investment securities
Held-to-maturity		88,740			41,858
Available-for-sale		72,910			132,963
Loans held for sale		2,200			7,775
Loans
Commercial		135,690			112,023
Commercial real estate		55,487			39,053
Residential mortgages		115,845			76,493
Credit card		26,295			22,500
Other retail		54,896			61,959
Total loans		388,213			312,028
Less allowance for loan losses		(6,936	)		(5,724	)
Net loans		381,277			306,304
Premises and equipment		3,858			3,305
Goodwill		12,373			10,262
Other intangible assets		7,155			3,738
Other assets		52,750			38,174
Total assets		$674,805			$573,284

Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing		$137,743			$134,901
Interest-bearing		387,233			321,182
Total deposits		524,976			456,083
Short-term borrowings		31,216			11,796
Long-term debt		39,829			32,125
Other liabilities		27,552			17,893
Total liabilities		623,573			517,897
Shareholders’ equity
Preferred stock		6,808			6,371
Common stock		21			21
Capital surplus		8,712			8,539
Retained earnings		71,901			69,201
Less treasury stock		(25,269	)		(27,271	)
Accumulated other comprehensive income (loss)		(11,407	)		(1,943	)
Total U.S. Bancorp shareholders’ equity		50,766			54,918
Noncontrolling interests		466			469
Total equity		51,232			55,387
Total liabilities and equity		$674,805			$573,284


NON-GAAP FINANCIAL MEASURES

(Dollars in Millions, Unaudited)	December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
Total equity		$51,232			$47,978			$49,069			$51,668			$55,387
Preferred stock		(6,808	)		(6,808	)		(6,808	)		(6,808	)		(6,371	)
Noncontrolling interests		(466	)		(465	)		(464	)		(468	)		(469	)
Goodwill (net of deferred tax liability) (1)		(11,395	)		(9,165	)		(9,204	)		(9,304	)		(9,323	)
Intangible assets (net of deferred tax liability), other than mortgage servicing rights		(2,792	)		(735	)		(780	)		(762	)		(785	)
Tangible common equity (a)		29,771			30,805			31,813			34,326			38,439

Common equity tier 1 capital, determined in accordance with transitional regulatory capital requirements related to the current expected credit losses methodology implementation		41,560			44,094			42,944			41,950			41,701
Adjustments (2)		(1,299	)		(1,300	)		(1,300	)		(1,298	)		(1,733	)
Common equity tier 1 capital, reflecting the full implementation of the current expected credit losses methodology (b)		40,261			42,794			41,644			40,652			39,968

Total assets		674,805			600,973			591,381			586,517			573,284
Goodwill (net of deferred tax liability) (1)		(11,395	)		(9,165	)		(9,204	)		(9,304	)		(9,323	)
Intangible assets (net of deferred tax liability), other than mortgage servicing rights		(2,792	)		(735	)		(780	)		(762	)		(785	)
Tangible assets (c)		660,618			591,073			581,397			576,451			563,176

Risk-weighted assets, determined in accordance with transitional regulatory capital requirements related to the current expected credit losses methodology implementation (d)		496,500	*		456,928			441,804			427,174			418,571
Adjustments (3)		(620	)*		(337	)		(317	)		(351	)		(357	)
Risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (e)		495,880	*		456,591			441,487			426,823			418,214

Ratios*
Tangible common equity to tangible assets (a)/(c)		4.5	%		5.2	%		5.5	%		6.0	%		6.8	%
Tangible common equity to risk-weighted assets (a)/(d)		6.0			6.7			7.2			8.0			9.2
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology (b)/(e)		8.1			9.4			9.4			9.5			9.6


	Three Months Ended

	December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
Net income applicable to U.S. Bancorp common shareholders		$853			$1,718			$1,464			$1,466			$1,582
Intangibles amortization (net-of-tax)		67			34			32			37			32
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization		920			1,752			1,496			1,503			1,614
Annualized net income applicable to U.S. Bancorp common shareholders, excluding intangible amortization (f)		3,650			6,951			6,000			6,096			6,403

Average total equity		49,731			50,284			49,633			53,934			55,875
Average preferred stock		(6,808	)		(6,808	)		(6,808	)		(6,619	)		(6,865	)
Average noncontrolling interests		(466	)		(464	)		(467	)		(468	)		(633	)
Average goodwill (net of deferred tax liability) (1)		(9,202	)		(9,192	)		(9,246	)		(9,320	)		(9,115	)
Average intangible assets (net of deferred tax liability), other than mortgage servicing rights		(1,637	)		(758	)		(783	)		(779	)		(656	)
Average tangible common equity (g)		31,618			33,062			32,329			36,748			38,606

Return on tangible common equity (f)/(g)		11.5	%		21.0	%		18.6	%		16.6	%		16.6	%

Net interest income		$4,293			$3,827			$3,435			$3,173			$3,123
Taxable-equivalent adjustment (4)		32			30			29			27			27
Net interest income, on a taxable-equivalent basis		4,325			3,857			3,464			3,200			3,150

Net interest income, on a taxable-equivalent basis
(as calculated above)		4,325			3,857			3,464			3,200			3,150
Noninterest income		2,043			2,469			2,548			2,396			2,534
Less: Securities gains (losses), net		(18	)		1			19			18			15
Total net revenue, excluding net securities gains (losses) (h)		6,386			6,325			5,993			5,578			5,669

Noninterest expense (i)		4,043			3,637			3,724			3,502			3,533
Less: Intangibles amortization		85			43			40			47			40
Noninterest expense, excluding intangibles amortization (j)		3,958			3,594			3,684			3,455			3,493

Efficiency ratio (i)/(h)		63.3	%		57.5	%		62.1	%		62.8	%		62.3	%
Tangible efficiency ratio (j)/(h)		62.0			56.8			61.5			61.9			61.6

*	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.


NON-GAAP FINANCIAL MEASURES
	Three Months Ended
(Dollars in Millions, Unaudited)	December 31, 2022			September 30, 2022
Net income attributable to U.S. Bancorp		$925			$1,812
Less: Notable items (1)		(952	)		(33	)
Net income attributable to U.S. Bancorp, excluding notable items		1,877			1,845
Annualized net income attributable to U.S. Bancorp, excluding notable items (a)		7,447			7,320
Average assets (b)		622,064			588,764
Return on average assets, excluding notable items (a)/(b)		1.20	%		1.24	%

Net income applicable to U.S. Bancorp common shareholders		$853			$1,718
Less: Notable items, including the impact of earnings allocated to participating stock awards (1)		(948	)		(33	)
Net income applicable to U.S. Bancorp common shareholders, excluding notable items		1,801			1,751
Annualized net income applicable to U.S. Bancorp common shareholders, excluding notable items (c)		7,145			6,947
Average common equity (d)		42,457			43,012
Return on average common equity, excluding notable items (c)/(d)		16.8	%		16.2	%
Net interest income		$4,293			$3,827
Taxable-equivalent adjustment (2)		32			30
Net interest income, on a taxable-equivalent basis		4,325			3,857
Net interest income, on a taxable-equivalent basis (as calculated above)		4,325			3,857

Noninterest income		2,043			2,469
Less: Securities gains (losses), net		(18	)		1
Total net revenue, excluding net securities gains (losses)		6,386			6,325
Less: Notable items (1)		(399	)		--
Less: Securities (gains) losses, net included in notable items		18			--
Total net revenue, excluding net securities gains (losses) and notable items (e)		6,767			6,325

Noninterest expense		4,043			3,637
Less: Notable items (1)		90			42
Noninterest expense, excluding notable items (f)		3,953			3,595
Less: Intangibles amortization		85			43
Noninterest expense, excluding notable items and intangible amortization (g)		3,868			3,552
Efficiency ratio, excluding notable items (f)/(e)		58.4	%		56.8	%
Tangible efficiency ratio, excluding notable items (g)/(e)		57.2	%		56.2	%

Net income applicable to U.S. Bancorp common shareholders, excluding notable items (as calculated above) (h)		$1,801			$1,751
Average diluted common shares outstanding (i)		1,501			1,486
Diluted earnings per common share, excluding notable items (h)/(i)		$1.20			$1.18

(1)	Notable items for the three months ended December 31, 2022 include the following:

$399 million ($297 million net-of-tax) of losses primarily related to interest rate hedging positions entered into after regulatory approval was obtained to manage the impact of interest rate volatility on capital prior to closing the MUFG Union Bank acquisition.

$90 million ($67 million net-of-tax) of merger and integration charges.

$791 million ($588 million net-of-tax) of provision for credit losses related to initially providing for acquired loans as well as charges related to the securitization of indirect automobile loans to optimize the balance sheet capital management.

Notable items for the three months ended September 30, 2022 included $42 million ($33 million net-of-tax) of merger and integration charges.

(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.


NON-GAAP FINANCIAL MEASURES
(Dollars in Millions, Unaudited)	Three Months Ended December 31, 2022
Net income applicable to U.S. Bancorp common shareholders		$853
Intangibles amortization (net-of-tax)		67
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization		920
Less: Notable items, including the impact of earnings allocated to participating stock awards (1)		(948	)
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization and notable items		1,868
Annualized net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization and notable items (a)		7,411

Average total equity		49,731
Average preferred stock		(6,808	)
Average noncontrolling interests		(466	)
Average goodwill (net of deferred tax liability) (2)		(9,202	)
Average intangible assets (net of deferred tax liability), other than mortgage servicing rights		(1,637	)
Average tangible common equity (b)		31,618
Return on tangible common equity, excluding notable items (a)/(b)		23.4	%
Net charge-offs		$578
Less: Notable items (3)		368
Net charge-offs, excluding notable items		210
Annualized net charge-offs, excluding notable items (c)		833
Average loan balances (d)		359,811
Net charge-off ratio, excluding notable items (c)/(d)		.23	%
Income before taxes		$1,101
Taxable-equivalent adjustment (4)		32
Less: Notable items (1)		(1,280	)
Income before taxes (taxable-equivalent basis), excluding notable items (e)		2,413
Income taxes		171
Taxable-equivalent adjustment (4)		32
Less: Notable items (1)		(328	)
Income taxes and taxable-equivalent adjustment, excluding notable items (f)		531
Income tax rate (taxable-equivalent basis), excluding notable items (f)/(e)		22.0	%

(1)	Notable items for the three months ended December 31, 2022 include the following:

$90 million ($67 million net-of-tax) of merger and integration charges.

(2)	Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements.

(3)	Notable items for the three months ended December 31, 2022 included net charge-offs of $179 million, reflecting uncollectible acquired loans previously charged-off and acquisition alignment, and $189 million loss on balance sheet optimization.

(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.


NON-GAAP FINANCIAL MEASURES
	Year Ended
(Dollars in Millions, Unaudited)	December 31, 2022			December 31, 2021			Percent Change
Net income applicable to U.S. Bancorp common shareholders		$5,501			$7,605
Intangibles amortization (net-of-tax)		170			126
Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization (a)		5,671			7,731

Average total equity		50,882			54,442
Average preferred stock		(6,761	)		(6,255	)
Average noncontrolling interests		(466	)		(632	)
Average goodwill (net of deferred tax liability) (1)		(9,240	)		(9,037	)
Average intangible assets (net of deferred tax liability), other than mortgage servicing rights		(991	)		(650	)
Average tangible common equity (b)		33,424			37,868

Return on tangible common equity (a)/(b)		17.0	%		20.4	%

Net interest income		$14,728			$12,494
Taxable-equivalent adjustment (2)		118			106
Net interest income, on a taxable-equivalent basis		14,846			12,600

Net interest income, on a taxable-equivalent basis (as calculated above)		14,846			12,600
Noninterest income		9,456			10,227
Less: Securities gains (losses), net		20			103
Total net revenue, excluding net securities gains (losses) (c)		24,282			22,724

Noninterest expense (d)		14,906			13,728
Less: Intangibles amortization		215			159
Noninterest expense, excluding intangibles amortization (e)		14,691			13,569

Efficiency ratio (d)/(c)		61.4	%		60.4	%
Tangible efficiency ratio (e)/(c)		60.5	%		59.7	%

Net interest income, on a taxable-equivalent basis (as calculated above)		$14,846			$12,600

Noninterest income		9,456			10,227
Total net revenue		24,302			22,827			6.5	%(f)
Less: MUFG Union Bank net revenue		302			--
Less: Notable items (3)		(399	)		--
Total net revenue, excluding MUFG Union Bank and notable items		24,399			22,827			6.9	%(g)

Noninterest expense		14,906			13,728			8.6	%(h)
Less: MUFG Union Bank noninterest expense		221			--
Less: Notable items (3)		329			--
Total noninterest expense, excluding MUFG Union Bank and notable items		14,356			13,728			4.6	%(i)

Operating leverage (f) - (h)		(2.1	)%
Operating leverage, excluding MUFG Union Bank and notable items (g) - (i)		2.3	%

Net income applicable to U.S. Bancorp common shareholders		$5,501
Less: Notable items, including the impact of earnings allocated to participating stock awards (3)		(1,134	)
Net income applicable to U.S. Bancorp common shareholders, excluding notable items (j)		6,635

Average diluted common shares outstanding (k)		1,490
Diluted earnings per common share, excluding notable items (j)/(k)		$4.45

(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.

(3)	Notable items for the year ended December 31, 2022 include the following:

$329 million ($253 million net-of-tax) of merger and integration charges.

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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	4Q 2022			3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022			Full Year 2021		Percent Change
Corporate and Commercial Banking		$542			$504		$308		7.5			76.0			$1,841			$1,564		17.7
Consumer and Business Banking		462			460		481		.4			(4.0	)		1,806			2,357		(23.4	)
Wealth Management and Investment Services		395			397		205		(.5	)		92.7			1,313			842		55.9
Payment Services		229			330		367		(30.6	)		(37.6	)		1,324			1,704		(22.3	)
Treasury and Corporate Support		(703	)		121		312		nm			nm			(459	)		1,496		nm

Consolidated Company		$925			$1,812		$1,673		(49.0	)		(44.7	)		$5,825			$7,963		(26.8	)

	Income Before Provision and Taxes							Percent Change						Income Before Provision and Taxes
	4Q 2022			3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022			Full Year 2021		Percent Change
Corporate and Commercial Banking		$701			$740		$509		(5.3	)		37.7			$2,604			$2,151		21.1
Consumer and Business Banking		831			654		640		27.1			29.8			2,636			3,006		(12.3	)
Wealth Management and Investment Services		529			533		278		(.8	)		90.3			1,760			1,130		55.8
Payment Services		649			725		622		(10.5	)		4.3			2,746			2,621		4.8
Treasury and Corporate Support		(385	)		37		102		nm			nm			(350	)		191		nm
Consolidated Company		$2,325			$2,689		$2,151		(13.5	)		8.1			$9,396			$9,099		3.3

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 2022, 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

Preliminary data


($ in millions)								Percent Change
	4Q 2022			3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022		Full Year 2021		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$986			$938		$694		5.1			42.1			$3,468		$2,853		21.6
Noninterest income		235			255		251		(7.8	)		(6.4	)		1,008		1,039		(3.0	)
Securities gains (losses), net		--			--		--		--			--			--		--		--
Total net revenue		1,221			1,193		945		2.3			29.2			4,476		3,892		15.0
Noninterest expense		510			453		436		12.6			17.0			1,862		1,741		7.0
Other intangibles		10			--		--		nm			nm			10		--		nm
Total noninterest expense		520			453		436		14.8			19.3			1,872		1,741		7.5
Income before provision and taxes		701			740		509		(5.3	)		37.7			2,604		2,151		21.1
Provision for credit losses		(22	)		68		98		nm			nm			149		65		nm
Income before income taxes		723			672		411		7.6			75.9			2,455		2,086		17.7
Income taxes and taxable-equivalent adjustment		181			168		103		7.7			75.7			614		522		17.6
Net income		542			504		308		7.5			76.0			1,841		1,564		17.7
Net (income) loss attributable to noncontrolling interests		--			--		--		--			--			--		--		--
Net income attributable to U.S. Bancorp		$542			$504		$308		7.5			76.0			$1,841		$1,564		17.7

Average Balance Sheet Data
Loans		$140,713			$131,578		$106,491		6.9			32.1			$127,916		$103,404		23.7
Other earning assets		4,786			4,506		4,690		6.2			2.0			4,532		4,537		(.1	)
Goodwill		1,922			1,912		1,912		.5			.5			1,915		1,715		11.7
Other intangible assets		215			3		4		nm			nm			57		5		nm
Assets		159,802			147,635		118,274		8.2			35.1			143,370		115,423		24.2

Noninterest-bearing deposits		54,591			53,280		66,292		2.5			(17.7	)		57,451		61,991		(7.3	)
Interest-bearing deposits		107,317			100,407		75,621		6.9			41.9			97,169		71,711		35.5
Total deposits		161,908			153,687		141,913		5.3			14.1			154,620		133,702		15.6

Total U.S. Bancorp shareholders’ equity		15,267			14,607		13,685		4.5			11.6			14,403		13,906		3.6

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 $701 million of income before provision and taxes in the fourth quarter of 2022, compared with $509 million in the fourth quarter of 2021, and contributed $542 million of the Company’s net income in the fourth quarter of 2022. The provision for credit losses decreased $120 million compared with the fourth quarter of 2021 primarily due to slower legacy Company loan balance growth in the current year quarter, partially offset by the impact of the MUFG Union Bank acquisition. Total net revenue was $276 million (29.2 percent) higher due to an increase of $292 million (42.1 percent) in net interest income, partially offset by a decrease of $16 million (6.4 percent) in total noninterest income. Net interest income increased primarily due to higher loan balances and the impact of higher rates on the margin benefit from deposits, partially offset by lower spreads on loans and lower noninterest-bearing deposits. Total noninterest income decreased primarily due to lower commercial products revenue due to lower capital markets revenue net of higher trading revenue as well as lower service charges driven by higher earnings credits. Total noninterest expense increased $84 million (19.3 percent) compared with a year ago primarily due to higher FDIC insurance expense and higher net shared services expense driven by investment in support of business growth and the impacts of the MUFG Union Bank acquisition including intangible amortization driven by the core deposit intangible.

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CONSUMER AND BUSINESS BANKING							Preliminary data
($ in millions)							Percent Change
	4Q 2022		3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022		Full Year 2021		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$2,072		$1,724		$1,504		20.2			37.8			$6,904		$6,085		13.5
Noninterest income		364		337		581		8.0			(37.3	)		1,556		2,496		(37.7	)
Securities gains (losses), net		--		--		--		--			--			--		--		--
Total net revenue		2,436		2,061		2,085		18.2			16.8			8,460		8,581		(1.4	)
Noninterest expense		1,573		1,404		1,442		12.0			9.1			5,783		5,563		4.0
Other intangibles		32		3		3		nm			nm			41		12		nm
Total noninterest expense		1,605		1,407		1,445		14.1			11.1			5,824		5,575		4.5
Income before provision and taxes		831		654		640		27.1			29.8			2,636		3,006		(12.3	)
Provision for credit losses		215		40		(1)		nm			nm			228		(136)		nm
Income before income taxes		616		614		641		.3			(3.9	)		2,408		3,142		(23.4	)
Income taxes and taxable-equivalent adjustment		154		154		160		--			(3.8	)		602		785		(23.3	)
Net income		462		460		481		.4			(4.0	)		1,806		2,357		(23.4	)
Net (income) loss attributable to noncontrolling interests		--		--		--		--			--			--		--		--
Net income attributable to U.S. Bancorp		$462		$460		$481		.4			(4.0	)		$1,806		$2,357		(23.4	)

Average Balance Sheet Data
Loans		$155,173		$143,022		$140,630		8.5			10.3			$145,079		$140,890		3.0
Other earning assets		2,485		3,043		6,570		(18.3	)		(62.2	)		3,117		8,093		(61.5	)
Goodwill		3,255		3,241		3,262		.4			(.2	)		3,249		3,429		(5.2	)
Other intangible assets		4,584		3,726		2,966		23.0			54.6			3,785		2,761		37.1
Assets		170,688		158,475		159,333		7.7			7.1			160,713		161,385		(.4	)

Noninterest-bearing deposits		35,708		31,193		33,360		14.5			7.0			32,256		33,063		(2.4	)
Interest-bearing deposits		171,258		166,223		162,132		3.0			5.6			167,938		157,592		6.6
Total deposits		206,966		197,416		195,492		4.8			5.9			200,194		190,655		5.0

Total U.S. Bancorp shareholders’ equity		13,105		12,468		12,212		5.1			7.3			12,550		12,319		1.9

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 $831 million of income before provision and taxes in the fourth quarter of 2022, compared with $640 million in the fourth quarter of 2021, and contributed $462 million of the Company’s net income in the fourth quarter of 2022. The provision for credit losses increased $216 million compared with prior year due to the impacts of balance sheet optimization and more favorable credit trends in the prior year quarter. Total net revenue was higher by $351 million (16.8 percent) due to an increase of $568 million (37.8 percent) in net interest income, partially offset by a decrease in total noninterest income of $217 million (37.3 percent). Net interest income reflected the favorable impact of higher rates on the margin benefit from deposits, partially offset by lower spreads on loans and lower loan fees. Total noninterest income decreased primarily due to lower mortgage banking revenue reflecting lower application volume, lower related gain on sale margins and fewer sales of loans. Noninterest income was also adversely impacted by lower residual gains on vehicle sales and the impact of pricing changes on deposit service charges. Total noninterest expense increased $160 million (11.1 percent) due to increases in net shared services expense due to investments in digital capabilities and the impact of the MUFG Union Bank acquisition, including intangible amortization driven by the core deposit intangible, as well as lower capitalized loan costs driven by lower mortgage production, partially offset by lower compensation expense and related loan expenses due to lower mortgage production.

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WEALTH MANAGEMENT AND INVESTMENT SERVICES

Preliminary data


($ in millions)							Percent Change
	4Q 2022		3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022		Full Year 2021		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$522		$475		$250		9.9			nm			$1,624		$1,002		62.1
Noninterest income		654		651		583		.5			12.2			2,553		2,222		14.9
Securities gains (losses), net		--		--		--		--			--			--		--		--
Total net revenue		1,176		1,126		833		4.4			41.2			4,177		3,224		29.6
Noninterest expense		639		587		551		8.9			16.0			2,390		2,079		15.0
Other intangibles		8		6		4		33.3			nm			27		15		80.0
Total noninterest expense		647		593		555		9.1			16.6			2,417		2,094		15.4
Income before provision and taxes		529		533		278		(.8	)		90.3			1,760		1,130		55.8
Provision for credit losses		2		3		5		(33.3	)		(60.0	)		9		7		28.6
Income before income taxes		527		530		273		(.6	)		93.0			1,751		1,123		55.9
Income taxes and taxable-equivalent adjustment		132		133		68		(.8	)		94.1			438		281		55.9
Net income		395		397		205		(.5	)		92.7			1,313		842		55.9
Net (income) loss attributable to noncontrolling interests		--		--		--		--			--			--		--		--
Net income attributable to U.S. Bancorp		$395		$397		$205		(.5	)		92.7			$1,313		$842		55.9

Average Balance Sheet Data
Loans		$23,705		$22,871		$19,620		3.6			20.8			$22,410		$18,095		23.8
Other earning assets		334		249		229		34.1			45.9			273		242		12.8
Goodwill		1,701		1,700		1,656		.1			2.7			1,720		1,628		5.7
Other intangible assets		356		311		130		14.5			nm			308		84		nm
Assets		27,436		26,439		22,970		3.8			19.4			26,036		21,303		22.2

Noninterest-bearing deposits		22,594		23,851		29,314		(5.3	)		(22.9	)		24,721		24,663		.2
Interest-bearing deposits		78,236		73,229		74,620		6.8			4.8			73,461		76,000		(3.3	)
Total deposits		100,830		97,080		103,934		3.9			(3.0	)		98,182		100,663		(2.5	)

Total U.S. Bancorp shareholders’ equity		3,759		3,726		3,318		.9			13.3			3,675		3,154		16.5

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 $529 million of income before provision and taxes in the fourth quarter of 2022, compared with $278 million in the fourth quarter of 2021, and contributed $395 million of the Company’s net income in the fourth quarter of 2022. The provision for credit losses decreased slightly compared with the prior year quarter. Total net revenue increased $343 million (41.2 percent) year-over-year reflecting an increase of $272 million in net interest income and $71 million (12.2 percent) in total noninterest income. Net interest income increased primarily due to the favorable impact of higher rates on the margin benefit from deposits. Total noninterest income increased primarily driven by higher trust and investment management fees reflecting lower money market fund fee waivers and the impact of the PFM acquisition, partially offset by the impact of unfavorable market conditions. Total noninterest expense increased $92 million (16.6 percent) compared with the fourth quarter of 2021 reflecting increasing compensation costs, higher net shared services expense driven by investment in support of business growth and the impact of the MUFG Union Bank acquisition. Compensation expense increased as a result of merit, the PFM acquisition in late 2021, and core business growth.

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PAYMENT SERVICES

Preliminary data


($ in millions)							Percent Change
	4Q 2022		3Q 2022		4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022		Full Year 2021		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$631		$627		$617		.6			2.3			$2,498		$2,457		1.7
Noninterest income		952		995		906		(4.3	)		5.1			3,799		3,550		7.0
Securities gains (losses), net		--		--		--		--			--			--		--		--
Total net revenue		1,583		1,622		1,523		(2.4	)		3.9			6,297		6,007		4.8
Noninterest expense		900		863		868		4.3			3.7			3,415		3,254		4.9
Other intangibles		34		34		33		--			3.0			136		132		3.0
Total noninterest expense		934		897		901		4.1			3.7			3,551		3,386		4.9
Income before provision and taxes		649		725		622		(10.5	)		4.3			2,746		2,621		4.8
Provision for credit losses		344		285		133		20.7			nm			980		349		nm
Income before income taxes		305		440		489		(30.7	)		(37.6	)		1,766		2,272		(22.3	)
Income taxes and taxable-equivalent adjustment		76		110		122		(30.9	)		(37.7	)		442		568		(22.2	)
Net income		229		330		367		(30.6	)		(37.6	)		1,324		1,704		(22.3	)
Net (income) loss attributable to noncontrolling interests		--		--		--		--			--			--		--		--
Net income attributable to U.S. Bancorp		$229		$330		$367		(30.6	)		(37.6	)		$1,324		$1,704		(22.3	)

Average Balance Sheet Data
Loans		$37,023		$35,819		$32,351		3.4			14.4			$34,627		$30,856		12.2
Other earning assets		110		392		356		(71.9	)		(69.1	)		634		93		nm
Goodwill		3,284		3,292		3,219		(.2	)		2.0			3,305		3,184		3.8
Other intangible assets		387		405		473		(4.4	)		(18.2	)		423		507		(16.6	)
Assets		42,699		42,090		38,280		1.4			11.5			41,109		36,549		12.5

Noninterest-bearing deposits		3,265		3,312		4,247		(1.4	)		(23.1	)		3,410		4,861		(29.8	)
Interest-bearing deposits		152		171		155		(11.1	)		(1.9	)		162		145		11.7
Total deposits		3,417		3,483		4,402		(1.9	)		(22.4	)		3,572		5,006		(28.6	)

Total U.S. Bancorp shareholders’ equity		8,544		8,257		7,936		3.5			7.7			8,235		7,642		7.8

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 generated $649 million of income before provision and taxes in the fourth quarter of 2022, compared with $622 million in the fourth quarter of 2021, and contributed $229 million of the Company’s net income in the fourth quarter of 2022. The provision for credit losses increased $211 million from a year ago primarily due to the impacts of increasing delinquency rates, along with stronger growth in loan balances. Total net revenue increased $60 million (3.9 percent) due to higher net interest income of $14 million (2.3 percent) and higher total noninterest income of $46 million (5.1 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 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. As a result, there was strong growth in corporate payment products revenue driven by improving business spending across all product groups. In addition, merchant processing services revenue increased due to higher sales volume and higher merchant fees, partially offset by the impact of foreign currency rate changes in Europe. Total noninterest expense increased $33 million (3.7 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
	4Q 2022			3Q 2022			4Q 2021		4Q22 vs 3Q22			4Q22 vs 4Q21			Full Year 2022			Full Year 2021		Percent Change
Condensed Income Statement
Net interest income (taxable-equivalent basis)		$114			$93			$85		22.6			34.1			$352			$203		73.4
Noninterest income		(144	)		230			198		nm			nm			520			817		(36.4	)
Securities gains (losses), net		(18	)		1			15		nm			nm			20			103		(80.6	)
Total net revenue		(48	)		324			298		nm			nm			892			1,123		(20.6	)
Noninterest expense		336			287			196		17.1			71.4			1,241			932		33.2
Other intangibles		1			--			--		nm			nm			1			--		nm
Total noninterest expense		337			287			196		17.4			71.9			1,242			932		33.3
Income (loss) before provision and taxes		(385	)		37			102		nm			nm			(350	)		191		nm
Provision for credit losses		653			(34	)		(248)		nm			nm			611			(1,458)		nm
Income (loss) before income taxes		(1,038	)		71			350		nm			nm			(961	)		1,649		nm
Income taxes and taxable-equivalent adjustment		(340	)		(54	)		33		nm			nm			(515	)		131		nm
Net income (loss)		(698	)		125			317		nm			nm			(446	)		1,518		nm
Net (income) loss attributable to noncontrolling interests		(5	)		(4	)		(5)		(25.0	)		--			(13	)		(22)		40.9
Net income (loss) attributable to U.S. Bancorp		$(703)			$121			$312		nm			nm			$(459	)		$1,496		nm

Average Balance Sheet Data
Loans		$3,197			$3,488			$3,663		(8.3	)		(12.7	)		$3,541			$3,720		(4.8	)
Other earning assets		205,152			196,698			207,935		4.3			(1.3	)		203,214			196,211		3.6
Goodwill		--			--			--		--			--			--			--		--
Other intangible assets		18			--			--		nm			nm			4			--		nm
Assets		221,439			214,125			233,502		3.4			(5.2	)		220,921			221,872		(.4	)

Noninterest-bearing deposits		2,754			2,408			2,723		14.4			1.1			2,556			2,626		(2.7	)
Interest-bearing deposits		5,959			2,695			1,374		nm			nm			3,260			1,629		nm
Total deposits		8,713			5,103			4,097		70.7			nm			5,816			4,255		36.7

Total U.S. Bancorp shareholders’ equity		8,590			10,762			18,091		(20.2	)		(52.5	)		11,553			16,789		(31.2	)

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 generated a $385 million loss before provision and taxes in the fourth quarter of 2022, compared with $102 million of income before provision and taxes in the fourth quarter of 2021, and recorded a net loss of $703 million in the fourth quarter of 2022. The provision for credit losses increased $901 million primarily due to the initial provision for credit losses recorded in the fourth quarter of 2022 related to the MUFG Union Bank acquisition as well as continued economic uncertainty in the current quarter relative to the reduction in the allowance for credit losses associated with improving economic conditions in the fourth quarter of 2021. Total net revenue was lower by $346 million due to a decrease of $375 million in total noninterest income, partially offset by an increase of $29 million (34.1 percent) in net interest income. Net interest income increased primarily due to the acquisition of MUFG Union Bank, partially offset by higher funding costs. The decrease in total noninterest income was primarily due to the impacts of balance sheet optimization associated with the acquisition of MUFG Union Bank. Total noninterest expense increased $141 million (71.9 percent) primarily due to merger and integration-related charges related to the acquisition of MUFG Union Bank, other accrued liabilities, and higher compensation expense reflecting merit, hiring to support business growth, core business growth and higher production incentives, 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.

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U.S. Bancorp (USB) 8-KU.S. Bancorp Completes Acquisition of MUFG Union Bank