Annual
Report
2024
For the past eight years, I have had the privilege to wake up every
day and lead what I consider to be one of the best companies in
the financial services industry. It has been the honor of a lifetime,
and it carried important responsibilities: build on the foundation our
predecessors started, take advantage of the moments that will define
our present, and ensure our company’s strength and stability for years
to come. I look back with gratitude – recognizing the progress we
made on our goals, the dynamic years we experienced together,
and the milestones that are yet to be reached that someone else
will now lead the company through.
Andy Cecere
Chairman and Chief
Executive Officer
L E T T E R T O S H A R E H O L D E R S
As I prepare to transition the CEO title to Gunjan Kedia this spring,
I am both reflective and optimistic. I have spent nearly 40 years
working for this wonderful company, and you placed considerable
trust in me. Thank you. Along with our Managing Committee and
our entire team of more than 70,000 employees, we have worked
hard to position the company for the best possible success.
Although some of those choices and investments came at a
short-term cost, they have built a runway for long-term gains.
I am confident in Gunjan and the entire Managing Committee
and their ability to grow and lead U.S. Bancorp into a bright future.
U.S. Bancorp is a strong and respected company, as it has
been for decades. Our stock has traded on the New York Stock
Exchange for 40 years, and we continue to extend our reach
far beyond what our institutional forerunners could have dreamed
at our founding in 1863. We are proud of our ability to consistently
deliver solid financial results no matter the economic climate,
and we will continue to improve our performance. We invested
in the business, rebuilt capital following the MUFG Union Bank
acquisition, managed expenses to improve our efficiency, and
returned to delivering positive operating leverage in the second
half of 2024; we will continue to focus on actions to create value
even in the most challenging of times. That will position us well
for growth in 2025 and beyond.
We talked about our strategy to do so in September, when we
hosted our first Investor Day in five years. Our usual triennial
schedule was preempted first by COVID-19 and then by our
Union Bank acquisition, but getting back to New York City and
telling the U.S. Bank story to our investors and analysts was
a priority for our team. We have invested billions of dollars in
digital capabilities and technology. We have built scale through
acquisitions and innovative partnerships like those we have with
State Farm and Edward Jones. We have enhanced products and
services like the recent launches of U.S. Bank Smartly® and our
Business Access advisors. We also have spent considerable time
simplifying and optimizing our organization – aligning business
lines under Gunjan, centralizing our operations, and enhancing
our technology experiences for employees and clients.
L E T T E R T O S H A R E H O L D E R S
I look back
with gratitude –
recognizing the
progress we made
on our goals, the
dynamic years
we experienced
together, and the
milestones that are
yet to be reached
that someone else
will now lead the
company through.”
1
2 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
L E T T E R T O S H A R E H O L D E R S
All these things came at a cost, whether in terms of resources,
capital or reprioritization. They were, however, the right actions
for our company. We took these steps without ever losing sight
of our foundational strengths in risk and financial discipline or of
our dedication to a culture of engagement and putting our clients
first. Which is why, now, we find ourselves at an inflection point.
It is incumbent upon us to leverage all we have done to maintain
a leadership role in the industry. The investments we have
made over the past seven years are now fully loaded into our
run rate and revenue growth will come through our unique,
interconnected businesses.
We have talked about being “one U.S. Bank” for many years.
That means we bring the best of our products, services and
relationships to our employees, clients and communities every
day. Interconnectedness is the manifestation of the one U.S. Bank
approach, and it is a focus Gunjan is bringing to the organization
as we head into the future. Our intent is to think as one team, and
more importantly, to deliver for our clients based on their needs,
leveraging our unique set of diverse businesses to help them
achieve their financial objectives.
This focus will help us deepen relationships, and it will allow us to
continue to offer a robust set of innovative solutions to customers.
It will enable us to strengthen partnerships – both inside our
physical branch footprint and beyond with digital offerings that
are some of the best in financial services. We aim to always be
nimble and relevant, so we can help clients of all types. That is
true whether it is an individual or family applying for their first
home mortgage or a multinational company seeking to make its
next big move.
Interconnectedness feeds our universal strategy that is enabled
by a unifying purpose and set of core values. It also extends to
our community and corporate responsibility initiatives. You will be
able to read more about this and all our community investment and
efforts in our next corporate responsibility report, which will be
released later this year.
Our intent is to think
as one team, and
more importantly,
to deliver for our
clients based
on their needs,
leveraging our
unique set of diverse
businesses to help
them achieve their
financial objectives.”
These achievements are possible only through the incredible
dedication and commitment of our employees. They believe in
serving our customers better than anyone else could serve them.
They do so the right way, and they treat each relationship like it
is with a family member or friend. Taking care of our employees’
needs is equally important to me and our entire Managing
Committee, and we have made significant investments in
training and development, employee technology, and similar
experiences to make it easier for them to do their jobs and
feel enriched while doing so.
The combination of their talent and expertise, along with the
investments we have made, the strategy we have laid out, and
our outstanding leadership team gives me great confidence in
our future. We are focused on capitalizing on our scale advantages
and business optimization efforts to drive growth, efficiency and
solid financial results and returns. We are committed to creating
value for you.
The economic, regulatory and political environment around
us will continue to evolve. The industry and market challenges
affecting our operations will not abate – they may shift from
headwinds to tailwinds and back again, but that just means it
is imperative for us to be ready to perform in any environment.
Our growth strategies and goals are clear and achievable.
Our commitments to our employees, clients and communities
are as strong as ever. And we remain firmly dedicated to
delivering strong financial performance for our shareholders.
Thank you for choosing to invest in U.S. Bancorp. On behalf of
our team of more than 70,000 employees, we appreciate you and
your trust. I am confident in the company’s future as I step aside,
and I am eager to see the success the company will achieve with
Gunjan as CEO.
With deep appreciation and gratitude,
Andy Cecere
Chairman and CEO, U.S. Bancorp
3
L E T T E R T O S H A R E H O L D E R S
Our growth
strategies and
goals are clear and
achievable. Our
commitments to our
employees, clients
and communities are
as strong as ever.”
4 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
F I N A N C I A L H I G H L I G H T S
1. Return on tangible common equity and tangible book value per share are non-GAAP financial metrics. Please see Non-GAAP Financial Measures
beginning on page 57.
8.9%
0.8%
decrease in noninterest
expenses year-over-year
increase in average total
deposits year-over-year
4.0%
increase in noninterest
income year-over-year
Common Equity Tier 1 capital
ratio (an increase of 70 basis
points throughout 2024)
10.6%
10.4%
1
increase in tangible book
value per share year-over-year
in share buybacks
completed
$100M
$27.5B
in net revenue
return on tangible common equity
17.2%
1
F I N A N C I A L S U M M A R Y
* Not meaningful
(a) 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.
(b) See Non-GAAP Financial Measures beginning on page 57.
(c) Calculated as U.S. Bancorp common shareholders' equity divided by common shares outstanding at end of the period.
(d) Excludes unrealized gains and losses on available-for-sale investment securities and any premiums or discounts recorded related to the transfer of investment securities
at fair value from available-for-sale to held-to-maturity.
Year Ended December 31
2024
2023
(Dollars and Shares in Millions, Except Per Share Data)
2024
2023
2022
v 2023
v 2022
Net interest income ............................................................................
$16,289
$17,396
$14,728
(6.4)%
18.1%
Taxable-equivalent adjustment(a) .........................................................
120
131
118
(8.4)
11.0
Net interest income (taxable-equivalent basis)(b) ...............................
16,409
17,527
14,846
(6.4)
18.1
Noninterest income ............................................................................
11,046
10,617
9,456
4.0
12.3
Total net revenue ..............................................................................
27,455
28,144
24,302
(2.4)
15.8
Noninterest expense ..........................................................................
17,188
18,873
14,906
(8.9)
26.6
Provision for credit losses ...................................................................
2,238
2,275
1,977
(1.6)
15.1
Income taxes and taxable-equivalent adjustment ..............................
1,700
1,538
1,581
10.5
(2.7)
Net income .......................................................................................
6,329
5,458
5,838
16.0
(6.5)
Net (income) loss attributable to noncontrolling interests ................
(30)
(29)
(13)
(3.4)
*
Net income attributable to U.S. Bancorp ..........................................
$6,299
$5,429
$5,825
16.0
(6.8)
Net income applicable to U.S. Bancorp common shareholders ........
$5,909
$5,051
$5,501
17.0
(8.2)
Per Common Share
Earnings per share ..............................................................................
$3.79
$3.27
$3.69
15.9%
(11.4)%
Diluted earnings per share ..................................................................
3.79
3.27
3.69
15.9
(11.4)
Dividends declared per share .............................................................
1.98
1.93
1.88
2.6
2.7
Book value per share(c) .........................................................................
33.19
31.13
28.71
6.6
8.4
Market value per share .......................................................................
47.83
43.28
43.61
10.5
(.8)
Average common shares outstanding ................................................
1,560
1,543
1,489
1.1
3.6
Average diluted common shares outstanding ....................................
1,561
1,543
1,490
1.2
3.6
Financial Ratios
Return on average assets ....................................................................
.95%
.82%
.98%
Return on average common equity .....................................................
11.7
10.8
12.6
Return on tangible common equity(b) ..................................................
17.2
16.9
17.0
Net interest margin (taxable-equivalent basis)(a) ..................................
2.70
2.90
2.72
Efficiency ratio(b) .................................................................................
62.3
66.7
61.4
Average Balances
Loans ..................................................................................................
$373,875
$381,275
$333,573
(1.9)%
14.3%
Investment securities(d) .......................................................................
166,634
162,757
169,442
2.4
(3.9)
Earning assets ....................................................................................
606,641
605,199
545,343
.2
11.0
Assets .................................................................................................
664,014
663,440
592,149
.1
12.0
Deposits .............................................................................................
509,515
505,663
462,384
.8
9.4
Total U.S. Bancorp shareholders' equity ..............................................
57,206
53,660
50,416
6.6
6.4
Period End Balances
Loans ..................................................................................................
$379,832
$373,835
$388,213
1.6%
(3.7)%
Allowance for credit losses .................................................................
7,925
7,839
7,404
1.1
5.9
Investment securities ..........................................................................
164,626
153,751
161,650
7.1
(4.9)
Assets .................................................................................................
678,318
663,491
674,805
2.2
(1.7)
Deposits .............................................................................................
518,309
512,312
524,976
1.2
(2.4)
Total U.S. Bancorp shareholders' equity ..............................................
58,578
55,306
50,766
5.9
8.9
Capital Ratios
Common equity tier 1 capital .............................................................
10.6%
9.9%
8.4%
Tier 1 capital ......................................................................................
12.2
11.5
9.8
Total risk-based capital ......................................................................
14.3
13.7
11.9
Leverage .............................................................................................
8.3
8.1
7.9
Total leverage exposure ......................................................................
6.8
6.6
6.4
Tangible common equity to tangible assets(b) ......................................
5.8
5.3
4.5
Tangible common equity to risk-weighted assets(b) .............................
8.5
7.7
6.0
Common equity tier 1 capital to risk-weighted assets, reflecting the full
implementation of the current expected credit losses methodology(b) ......
10.5
9.7
8.1
5
Consumer and
Business Banking:
Consumer Banking, Consumer Lending
(Mortgage, Auto/RV), Business Banking,
Business Lending
6 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
Our clients
~13M
consumer clients
~1.4M
business clients
~500K
wealth clients
~45K
corporate and
institutional clients
Y O U R U. S . B A N K
Let us introduce ourselves
U.S. Bancorp is the parent company of U.S. Bank, the fifth largest commercial bank in the United States.
Our headquarters are in Minneapolis, but our more than 70,000 teammates are located globally. We’ve
been recognized for our digital innovation, customer service and community partnerships, and we’re
proud to be named one of the 2024 World’s Most Ethical Companies® by Ethisphere and one of the most
admired superregional banks by Fortune®. Our core businesses include Consumer and Business Banking,
Wealth, Corporate, Commercial and Institutional Banking and Payment Services. This diverse mix of
businesses is the key to how we deliver consistent financial performance, helping us put the power of one
U.S. Bank to work for you.
Business line revenue percentages above for the year ended December 31, 2024, are non-GAAP financial measures, are given on a taxable-equivalent basis and
exclude Treasury and Corporate Support. See Non-GAAP Financial Measures beginning on page 57 for reconciliation.
How each business line delivers for you
Our core revenue-generating business lines have more than
50 business areas within them that create “through-the-
cycle” earnings power.
Wealth, Corporate, Commercial
and Institutional Banking:
Wealth Management, Asset Management,
Capital Markets, Global Fund Services,
Corporate Banking, Commercial Banking,
Commercial Real Estate, Global Corporate
Trust and Equipment Finance
~43%
Payment Services:
Retail Payment Solutions, Merchant
Payment Services and Corporate Payment
and Treasury Solutions
~32%
~25%
7
Y O U R U. S . B A N K
Our demonstrated results
1. Based on FDIC Summary of Deposits survey within 26-state footprint per S&P Global Market Intelligence with deposits per branch capped at $250M.
FDIC data as of June 30, 2024; 2. Inside Mortgage Finance 3Q 2024. Based on dollar amount of transactions; 3. SBA Lender Report 2024; 4. Javelin Strategy
& Research, 2024 based on scores across six evaluation categories; 5. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse
products or services of, U.S. Bancorp; 6. J.D. Power 2024 U.S. full-service investor satisfaction study released on March 21, 2024 based on investors
surveyed from January 2023 – January 2024, who may be working with a financial advisor from U.S. Bank or its affiliate, U.S. Bancorp Investments; 7. U.S.
market share data sourced from Greenstreet ABAlert for the ABS/MBS and CLO rankings and Refinitiv for the Corporate and Municipal rankings. Rankings
based upon number of deals and volume in dollars. Data as of December 31, 2024; 8. LSEG/LPC as of September 30, 2024, based on number of deals;
9. Volume per Nilson Report (Issue 1263, May 2024); 10. Rankings are based on midyear 2024 V/MA issuer volume per Nilson Report (Issue 1271, September
2024). Includes consumer, small business and commercial volume; 11. Based on results for key competitors and company reports as of December 31, 2024;
12. Ranking assumes joint ventures are consolidated per Nilson Report (Issue 1260, March 2024).
#3
U.S. Commercial
card issuer
ranked by
spend volume9
#5
U.S. credit
issuer
ranked by
volume10
#1
freight payments
provider
ranked by
volume11
TOP3
bank-owned U.S.
merchant acquirer
ranked by
volume12
Payment Services
#4
deposit share
within footprint1
#2
bank retail
mortgage lender2
#5
SBA lender
ranked by
volume3
#1
mobile and online
banking4
Consumer and Business Banking
Wealth, Corporate, Commercial and Institutional Banking
~90%
of Fortune
1,000 companies
bank with us5
#1
J.D. Power rated
Wealth Advisor6
#1
in Corporate
Trust markets
we serve7
#4
investment grade
syndicated
loans8
With the second-oldest active banking charter in the United States, U.S. Bancorp
has long been a trusted financial partner. And while we have longevity, we’ve
also remained relevant. We’ve invested in digital capabilities like artificial
intelligence to create the types of experiences today’s consumers – our clients
and team members – expect. We’ve acquired scale, optimized our distribution
and developed strategic partnerships that have expanded our reach. We’ve
strategically grown our product set to meet the growing needs of our clients.
While these moves have required financial investment in recent years, they’ve
positioned us for long-term growth and efficiency in the years ahead. They’ve
also positioned us to add value for clients and you, our shareholders. In 2024,
we strengthened this base, executing with focus and the future in mind.
8 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
Building on our
strong foundation
9
Strong financial position
In 2024, we built on our strong capital base with levels above
the “well-capitalized” requirements. We grew our CET1 capital
ratio1 to 10.6% as of December 31, 2024, and we maintained a
robust liquidity profile with abundant cash levels and low-cost
borrowing capacity.
Disciplined risk management
Our integrated approach to risk has delivered a proven record
throughout economic cycles. We’re disciplined with our
underwriting, and that drives predictable credit performance
with net charge-off rates that typically outperform our peers.
We proactively manage credit risk on a through-the-cycle basis.
And we’re equipped to meet increasing regulatory expectations
while enabling business growth through effective change
management and enterprise risk management routines.
Sustainable earnings power
Our diversified and unique business model has delivered consistent
results even in challenging environments, thanks to a unique mix
of fee income businesses supporting our short- and long-term
growth. In 2024, fee income represented 41% of U.S. Bancorp
total net revenue.3
1. As of December 31, 2024; Common
equity tier 1 capital to risk-weighted assets,
calculated in accordance with transitional
regulatory requirements related to the
current expected credit losses methodology.
2. For full year 2024. Non-GAAP financial
metric. See Non-GAAP Financial Measures
for reconciliation beginning on page 57.
3. Represents non-interest income, excluding
$154 million of securities losses, as a
percentage of total net revenue on a
taxable-equivalent basis for the year
ended December 31, 2024.
CET1 capital ratio1
10.6%
Return on tangible
common equity2
17.2%
Fee income as a percent
of total net revenue3
41%
10 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
Driving growth through an
interconnected approach
California business owner Armando Silberman is one example. Mr. Silberman wanted to grow his import
and export irrigation equipment business. In 2022, he acquired Fallbrook Irrigation, based in north San Diego
County, and maintained the banking relationship with Union Bank for continuity. When U.S. Bank purchased
Union Bank in 2022, Mr. Silberman made the transition with us – and deepened his banking relationship. Since
becoming a U.S. Bank client, he’s benefited from new products and services at his disposal. He’s upgraded his
payment processing equipment, acquired a business credit card and expanded his online banking capabilities
– helping him add clients and employees.
Growing our business is not only increasing revenue. It’s also about adding value
for our clients. It’s about making it easier for them to run their businesses, large
or small, streamlining processes, and making it simpler to do business with us.
When we effectively interconnect our solutions, we create significant value for
our clients, giving us the opportunity to grow with them.
11
E N H A N C I N G P R O D U C T I N N O V A T I O N A N D C O N N E C T I V I T Y
Stepping up our efforts
in the healthcare sector
In the third quarter of 2024, U.S. Bancorp acquired
Salucro Healthcare Solutions, LLC. The Tempe,
Arizona-based company offers online billing and
payments solutions for healthcare providers across
the country. Salucro had been a partner of Elavon,
our merchant acquiring unit within the bank, and its
platform has been sold through Elavon as MedEpay
Solutions™. The acquisition bolsters our focus on
the healthcare industry, which we’ve served for
more than a century. Our diverse set of banking and
payment services for hospital systems, insurers,
medical equipment manufacturers and medical,
dental, and veterinary practices help our clients
focus on their core mission of caring for patients.
Research we’ve done confirms that there is a
demand for services like MedEpay Solutions™:
Additionally, we’ve refined how we work with
clients in the healthcare sector, creating healthcare
practices in both Business Banking and the
Institutional Client Group to ensure we’re bringing
our full suite of resources to clients.
Making accounts receivable
more efficient for clients and
their customers
We also delivered a new comprehensive accounts
receivable (AR) platform in 2024 to help suppliers
accelerate cash flow, cut costs through automation
and deliver better payment experiences. U.S. Bank
Advanced Receivables brings together the bank’s
payment and risk management capabilities with top
accounts receivable technology to improve
the intricate business-to-business (B2B)
receivables process. With this new platform,
suppliers gain real-time visibility into their financial
position and cash flow. The addition of U.S. Bank
Advanced Receivables comes as senior finance
leaders across the country increase their focus
on operational efficiency.
Streamlining in-store and online
payments with new cloud-based
payments platform
Furthering our efforts to enhance product
connectivity, Elavon launched its first unified
cloud-based payments platform in the fourth
quarter of 2024. Elavon® Payment Gateway is a
single, omni-commerce gateway solution serving
our clients globally. Designed to simplify and
enhance the payment experiences for businesses
of all sizes, Elavon® Payment Gateway enables
merchants to accept payments in-store, online
and via mobile devices, all within a scalable, single,
global platform. The platform offers scalability
through online checkout experiences, software
development kits, plugins to e-commerce software
solutions and in-person payments powered by
the latest in Android Smart Terminal Device
technology. Another key benefit for businesses
and their customers is the simplicity of use with
digital wallet integration, regional payment
methods and pay by link functionality for easy,
fast checkout payments without complex
integrations. Elavon Payment Gateway will
be available in North America and Europe on
a phased-in basis.
44%
of surveyed
finance leaders
say cutting costs and driving efficiencies
in the finance function is a top priority and
that investing in new technology is the
primary solution to delivering savings.*
*Data from the U.S. Bank CFO Insights report.
Of the 1,800 patients surveyed about the
consumer payment experience:
53%
32%
of respondents said they
want to receive billing
information by email
would switch providers for
one that offers payment
plans and digital payments
12 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
Expanding working capital
financing options
Providing the best solutions for our clients
sometimes means partnering with other experts.
That’s why U.S. Bank teamed up with Levantor
Capital in 2024 to expand flexible working capital
financing options for U.S. Bank clients. The bank
offers a wide range of financing solutions and risk
management resources to help firms improve their
working capital along supply chains. However, in
recent years, working capital needs have expanded
as a result of growing supplier networks across
multiple jurisdictions. To meet the demand, we now
offer our clients Levantor’s sales finance solutions.
This provides additional options for trade partners
to optimize payment terms, including with suppliers
in jurisdictions outside the U.S. Bank network.
Levantor’s financing arrangements can help buyers
extend payment without reworking established
commercial and payment terms with their suppliers.
We now offer central depository
functions for securities issued
in France
We also expanded our support for debt capital
market transactions in 2024. U.S. Bank now has
the capability to offer this service for clients who
issue securities in the French central securities
depository (CSD) operated by Euroclear France.
U.S. Bank Global Corporate Trust has offered
issuing and paying agency services for commercial
paper and medium-term notes, standalone
corporate bonds and structured finance in
international markets for more than 12 years.
By establishing the infrastructure that supports
the TARGET2-Securities (T2S) platform, we will
be able to add more European CSD markets in
the future. We currently offer investment services
solutions from three European locations in Ireland,
Luxembourg and the United Kingdom.
E N H A N C I N G P R O D U C T I N N O V A T I O N A N D C O N N E C T I V I T Y
U.S. Bank offers Paze℠ for
cardholders and merchants
Another 2024 highlight? We made it more
convenient for consumers to make purchases
online, and for merchants to accept the payments.
U.S. Bank clients with eligible credit and debit
cards now have access to Paze℠, a new
streamlined online checkout solution. With Paze,
there is no manual card entry, no new password to
remember* and no need to download third-party
applications. The solution is integrated with their
U.S. Bank digital experience. U.S. Bank also
offers options for businesses to easily accept
Paze transactions through a seamless integration
with Elavon's Payment Gateway for e-commerce.
Paze provides cardholders added security by
tokenizing credit and debit card numbers, so
the 16-digit card number is not shared with the
online merchant. Eligible U.S. Bank clients can
activate Paze by signing in through the U.S. Bank
app, online at usbank.com or by checking out at
a participating retailer’s website. For merchants,
there is no additional transaction fees to use
Paze as a checkout option.
*Some merchants may require account setup to make purchases.
13
D E E P E N I N G O U R C L I E N T R E L A T I O N S H I P S
Our new industry-leading
card, savings combination
We also increased ways for our clients to earn
and save with the launch of two new U.S. Bank
Smartly® products designed to work together to
maximize credit card rewards while also helping
clients earn more on their savings balances.
The U.S. Bank Smartly™ Visa Signature® Card
is a credit card that offers up to 4% cash back
on every purchase, and U.S. Bank Smartly®
Savings is a competitive rate savings account.
The combination provides an everyday banking
solution that empowers clients to manage their
money easily while maximizing cash-back rewards
based on total eligible balances with U.S. Bank.
U.S. Bank introduces new
Institutional Client Group
In the second quarter of 2024, U.S. Bank brought
deeply experienced relationship-management
teams under one umbrella, part of a strategic effort
to serve clients in a more holistic, consistent way.
The Institutional Client Group works with internal
partners to deliver the entire bank – core banking,
capital markets, payment processing, and more –
to middle-market, large corporate and government
organizations, helping them grow and thrive.
A surge in SBA lending
in fiscal year 2024
Powering human potential is part of our mission,
and we delivered in a big way with small businesses
this year. U.S. Bank grew Small Business Association
(SBA) lending in fiscal year 2024 to $708.2 million
in Small Business Administration 7(a) loans. That’s
up 74% from fiscal year 2023, according to the
SBA. In doing so, we helped thousands of small
business clients acquire new businesses, buy into
partnerships, purchase property and acquire the
working capital needed to grow. The loan volume
was fifth-largest among all SBA lenders nationally.
in Full-Service Wealth Management Firm Investor
Satisfaction in 2024 J.D. Power® study.
For J.D. Power 2024
award information,
visit jdpower.com/awards.
#1
Growing our business
in California
Following our acquisition of Union Bank,
we grew our market share in California
to #4 in deposits, up from #101. We’ve
grown the number of net new clients
in California by more than 5%2. And our
data-driven collaboration across client
segment sales teams and coordinated
product and marketing initiatives
have helped us significantly deepen
relationships in the market:
consumer
credit card
growth3
53%
increase in
business credit
card relationships3
27%
increase in wealth
and commercial
revenue4
~3.1%
1. California percentage of deposits. Based on FDIC data as of June 2024 (#4 rank) vs. June 2022 (#10 rank); 2. YoY data as of September 30, 2024.
Net new client growth excludes Union Bank clients; 3. YoY data as of September 30, 2024; 4. YoY data as of April 30, 2024.
Expanding our alliance strategy with
a new Edward Jones partnership
In 2024, we announced our newest strategic
partnership to serve the banking needs of
Edward Jones customers by providing U.S. Bank
deposit and credit card solutions. Through the
alliance, more than 19,000 Edward Jones financial
advisors will have the unique opportunity and tools
to introduce co-branded U.S. Bank deposit and credit
card products to the firm’s approximately 8 million
U.S. customers beginning later in 2025. This is the
latest step in the U.S. Bank alliance strategy to extend
the company’s geographic reach and serve more
clients, beyond our branch footprint. In 2020,
U.S. Bank launched what has been a successful
alliance with State Farm to assume the insurance
provider’s deposit and credit card account products.
Empowering more families to teach
kids about money with Greenlight
We’ve made it easier for families to teach positive
financial habits to their kids thanks to a new
partnership. U.S. Bank clients
with Bank Smartly® and other
eligible checking accounts now
have complimentary access to
Greenlight’s award-winning debit
card and money app for kids
within the U.S. Bank® Mobile
App, which helps teach their
children critical financial skills. U.S. Bank became
the first financial institution to offer Greenlight™
through an embedded mobile app experience.
Used by more than 6 million parents and kids
nationally, Greenlight provides kids and teens
money management experience while parents
enjoy convenience and peace-of-mind monitoring.
Parents can easily send money, automate allowance
payments, manage chores, set flexible spending
controls, get real-time notifications of all transactions
and more. Kids and teens can put money skills into
practice, learning to earn, save and spend wisely –
all with parental supervision. Kids can also take
on interactive educational challenges and earn
rewards through an in-app financial literacy game
with a best-in-class curriculum.
14 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
B R O A D E N I N G O U R R E A C H
A new division to serve
private capital asset managers
In the first quarter of 2024, we launched a new
division dedicated to serving private capital
firms and global asset managers. The Private
Capital and Global Asset Management division
brings together teams across the bank that
currently serve more than 200 private capital
clients with a range of products and services,
including fund custody and administration,
payment solutions for portfolio companies,
lending and capital markets underwriting and
distribution. The centralized group of private
capital experts streamlines the experience for
asset managers and will help the bank grow
its offering to additional private equity and
private credit firms and other diversified
investment managers.
Growing our reach through our
private label credit card business
In the summer of
2024, we helped
drive growth
through an upgrade
of the mobile app
for our private
label credit card
business, Elan
Financial Services.
Elan, a part of Retail
Payment Solutions
(RPS), is a division
of U.S. Bank that provides more than 1,200
other banks and credit unions with a partner-
branded, turnkey credit card program for their
consumer and small business customers. One in
eight financial institutions in the United States
has their credit card issued through Elan. Just
three months after the new app launched, we
increased unique logins by 150,000 across all
partner card digital activity. Additionally, the
app has since increased its overall rating to
4.8 out of 5 stars. The Elan app was rebuilt
with reusability in mind, leveraging the best
from our No. 1 rated U.S. Bank Mobile App.
15
Investing in our future
We’re in an era where technology is reshaping every aspect of the financial industry
and changing the expectations of our customers and clients. To stay a step ahead,
we must anticipate what’s ahead. We’re focused on harnessing the power of these
advancements to help us operate with more efficiency, enhance the experience
our clients have and ensure we’re continually ready for what’s next. At the heart
of investing for the future is our investment in our people. Powering their potential
powers our potential.
Building AI and digital capabilities of the future
Artificial intelligence (AI) has become one of the hottest topics around
the world only recently, but use of AI has been common at U.S. Bank
for a while. We’ve actively invested in AI capabilities over the past
few years to help improve experiences for both our clients and team
members. In 2024, we took it a step further and created an artificial
intelligence Center of Excellence (CoE), which oversees all aspects
of AI strategy and execution at the bank. Central to the CoE is a team
of experts who research, develop, design, and implement use cases
and governance in partnership with technology, product and risk
teams throughout the company. Although there is still a lot to learn
about AI and its promise for the future of banking, we’re proud of our
efforts so far and are taking steps to enable growth and success. Right
now, we’re focused on implementing AI in the highest impact areas:
using artificial intelligence in operations to reduce call center times,
increase developer productivity with faster code development and
testing, improve marketing performance with scaled personalization
and reduce fraud with enhanced fraud identification.
Best-in-class smart assistant – Corporate Insight 20241
#1 mobile and online banking – Javelin Strategy & Research 20242
#1 mobile and #2 online banking – Keynova 20243,4
1. Corporate Insight Mobile Monitor Competitive
Research Report: Mobile Virtual Assistants,
1Q 2024; 2. Javelin Strategy & Research’s
2024 Online Banking Scorecard and 2024
Mobile Banking Scorecard; 3. Keynova Group
semiannual Mobile Banker Scorecard, March
2024; 4. Keynova Group 2Q 2024 Online Banker
Scorecard, May 2024; 5. Growth rate represents
December 2019 through June 2024. Multiple of
total sales where the account booked is a result
of a customer submitting an application through
a digital channel (U.S. Bank Mobile App, online
banking, and mobile web).
2X growth
in consumer banking digital
sales share since 20195
4X growth
in small business banking digital
sales share since 20195
2X increase
in the number of consumer
and small business products
we can deliver digitally
since 20195
~85%
of consumer clients
engage with us
digitally
Meanwhile, our digital capabilities continue to set us apart and drive
growth. Our digital investments have opened doors nationally, helping
us expand from a physical regional branch network to multi-channel
distribution, nationally and internationally, through digital banking,
acquisitions and key partnerships. Our true competitive advantage is
our ability to reuse the capabilities we’ve built to date. When we create
a new experience, about 80% of the build is simply assembling existing
components. This means we can create new opportunities for growth
without significant new costs, as well as get to market faster and with
more efficiency – all while maintaining a best-in-class experience.
Modernizing our technology for
an improved client experience
Along with our best-in-class digital products and services, we’ve
been on a journey to modernize our technology and unify and
streamline our core operating infrastructure. Our focus has been
on creating software and hardware capabilities that can be easily
scaled, enabling us to deliver enhancements and updates more
frequently. What this means is that we are investing in customer-
facing applications and connectivity interfaces with our many
partners to provide the best possible client experience online and
on mobile. Another example is our work to create a unified data
platform, which helps improve our back-end performance, create
better experiences for clients and reduce costs on our end. And
we’re updating our core systems that hold critical data like account
information, transactions and daily balances and migrating about
two-thirds of our applications to the cloud from on premises, so
we can get products to market much faster. We expect to realize
additional operating efficiencies once we complete our application
migration. Overall, our $2.5 billion annual investment in technology
enables business transformation, supports business growth, and
enhances our client and employee experiences.
Building our teams’ skills for the future
We’ve said it before, and we’ll say it again: Our people are our
greatest asset. They are the innovators and connectors. They
build best-in-class digital capabilities, deliver top-notch customer
service and help clients solve business challenges with our business
solutions. They make it possible for us to grow with our clients. To
attract and keep top talent, it’s critical we help our team members
to grow, too. In the second quarter of 2024, our Global Learning
and Development team launched Skills Academy, a new learning
platform providing team members access to training courses on
thousands of topics such as strengthening communication skills,
building expertise in various software programs, and learning about
products. To kick it off, we hosted a company-wide Development
Day. Almost 8,000 teammates showed up to see how the platform
can help them build new skills for their current and future roles. In
the first seven months of the platform, more than 38,000 people
completed more than 50,000 voluntary learning courses in the
Skills Academy! Not surprisingly, topics like AI and digital literacy
are some of the most popular content.
Team members are also loving our new Thrive Thursdays program.
Each week, more than 1,000 people attend the virtual session. It’s
a chance to network, learn more about the company and connect
– to the mission and with each other. Topics vary from wellbeing to
professional growth and learning more about parts of the business.
16 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
D R I V I N G O P E R A T I O N A L E X C E L L E N C E
Recognized as a
great place to work
Each year, we’re honored to be
on some of the most prestigious
lists recognizing our inclusive
and ethical culture.
“World’s Most Ethical Companies” and
“Ethisphere” names and marks are registered
trademarks of Ethisphere LLC.
From Fortune, ©2024 Fortune Media IP Limited.
All rights reserved. Used under license. Fortune®
is a registered trademark and Fortune World’s
Most Admired Companies™ is a trademark of
Fortune Media IP Limited and are used under
license. Fortune and Fortune Media IP Limited
are not affiliated with, and do not endorse the
products or services of, U.S. Bancorp.
17
Serving those who served
In 2024, we also continued our work with military
nonprofits, Freedom Alliance, Operation Homefront
and VAREP, to give back to veterans through three
key programs:
• Driven to Serve
Sixteen veterans (or Gold
Star families) received a
payment-free new vehicle
in 2024. In total, we’ve
donated 84 new vehicles
since 2018.
• U.S. Bank Home
In 2024, we donated four mortgage-free homes
to veterans, bringing our total to 30 homes valued
at a total of $8.1 million since 2013.
• Home repair
Through our Repair Assistance for Military
Personnel (RAMP) program, we have helped fund
critical home rehab projects including replacing
roofs, repairing sewers, and making homes
accessible for veterans in need. Since 2017,
32 veterans and their families have received
home improvements.
Additionally, more than 1,600 employees
participated in at least one veteran-focused event
hosted by our Proud to Serve business resource
group in 2024!
Increasing access to small business
funding and homeownership
One way we’re contributing to communities
is through growing our team that helps small
businesses grow. In 2024, we doubled our number
of Business Access Advisors (BAA) to 18 and
expanded to six more cities. The program, launched
in 2021, works to help small businesses gain access
to capital, financial education and connections that
can help their businesses flourish. Business Access
Advisors are connectors. They don’t sell products or
write loans. They build bridges to resources both in
the bank and in the community. The BAA program
is part of U.S. Bank Access Commitment®, the
bank’s long-term approach to help close the wealth
gap. We also launched a new initiative to develop
bilingual mortgage loan officers. The eleven-
person cohort is participating in a yearlong training
and development program to become mortgage
loan officers as part of the U.S. Bank Access®
Home initiative.
Investing in our
communities
Investing in the future includes the future of the communities we serve. There are a
lot of ways we do it, some visible and others more behind the scenes. Building homes.
Teaching financial literacy. Donating money and time to organizations that are the
heartbeat of communities. Whatever form, we’re thankful for the partners that help
us make a meaningful impact.
Receive digital delivery of future Annual Reports
Help us promote environmental stewardship. We’ll donate $1 to Arbor Day for each
shareholder who opts for electronic delivery of future Annual Reports. Each dollar
supports the planting of a new tree. Sign up at usbank.com/electronicAR.
$509.1M
committed to community
development financial
institutions (CDFIs) and
other intermediaries2
99%
renewable electricity sourced
for our operations3
$111.2M
in corporate contributions
and U.S. Bank foundation
giving to nonprofits
312,000
employee volunteer hours
$4.7B
in renewable energy
tax equity and loans
$2.9B
in affordable housing
tax equity and loans
1.8M
individuals received
financial education
$15.3M
pledged to nonprofits
through annual Employee
Giving Campaign
1. Community Reinvestment Act (CRA) exam by the Office of the Comptroller of the Currency (OCC) is from January 1, 2016, to December 31, 2020; 2. Figure
represents total 2024 loans, equity investments, foundation grants and corporate contributions; 3. As of year-end 2023 (most recent data available).
Website references and/or links throughout this report are provided for convenience only, and the content of such websites is not incorporated by reference
into this report.
Our community impact
As a financial services provider, we invest our human and financial resources to help people and the planet.
You can learn more about our progress in our 2023 Corporate Responsibility Report, with a 2024 version
expected later this year. Below are some key advancements we made in 2024.
Outstanding
rating received by U.S. Bank
from the most recent
Community Reinvestment
Act (CRA) exam1
18 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
19
M A N A G I N G C O M M I T T E E
Souheil S. Badran
Senior Executive Vice
President and Chief
Operations Officer
Andrew Cecere
Chairman and Chief
Executive Officer
Gunjan Kedia
President
Dominic
V. Venturo
Senior Executive
Vice President and
Chief Digital Officer
John C. Stern
Senior Executive
Vice President
and Chief
Financial Officer
Mark G. Runkel
Senior Executive Vice
President, Head of
Payments: Merchant
and Institutional
Stephen L. Philipson
Senior Executive Vice
President, Head of
Wealth, Corporate,
Commercial and
Institutional Banking
Jodi L. Richard
Vice Chair and
Chief Risk Officer
Arijit Roy
Senior Executive
Vice President,
Head of Consumer
and Business
Banking Products
Felicia La Forgia
Senior Executive
Vice President,
Head of the Institutional
Client Group
Sekou Kaalund
Senior Executive
Vice President, Head
of Branch and Small
Business Banking
Courtney E. Kelso
Senior Executive Vice
President, Head of
Payments: Consumer
and Small Business
Elcio R.T. Barcelos
Senior Executive
Vice President
and Chief Human
Resources Officer
James
L. Chosy
Senior Executive
Vice President
and General
Counsel
Gregory G.
Cunningham
Senior Executive Vice
President and Chief
Diversity Officer
Revathi N. Dominski
Senior Executive
Vice President, Chief
Social Responsibility
Officer, and President,
U.S. Bank Foundation
Venkatachari Dilip
Senior Executive Vice
President and Chief
Information and
Technology Officer
Terrance
R. Dolan
Vice Chair
and Chief
Administration
Officer
20 U.S. Bancorp Annual Report 2024 | usbank.com/AR2024
B O A R D O F D I R E C T O R S
Aleem Gillani
Retired Corporate
Executive Vice
President and Chief
Financial Officer,
SunTrust Banks, Inc.
Kimberly N.
Ellison-Taylor
Founder and Chief
Executive Officer,
KET Solutions, LLC
Kimberly
J. Harris
Retired President
and Chief Executive
Officer, Puget
Energy, Inc.
Scott W. Wine
Former Chief
Executive Officer,
CNH Industrial N.V.
John P. Wiehoff
Retired Chairman
and Chief
Executive Officer,
C.H. Robinson
Worldwide, Inc.
Loretta E. Reynolds
Founder and Chief
Executive Officer,
LEReynolds Group, LLC
Roland A. Hernandez
Founding Principal
and Chief Executive
Officer, Hernandez
Media Ventures (Lead
Independent Director)
Richard
P. McKenney
President and Chief
Executive Officer,
Unum Group
Yusuf I. Mehdi
Executive Vice
President, Consumer
Chief Marketing
Officer, Microsoft
Corporation
Andrew Cecere
Chairman
and Chief
Executive Officer,
U.S. Bancorp
Gunjan Kedia
President,
U.S. Bancorp
Warner L. Baxter
Retired Executive
Chairman and Former
Chairman, President and
Chief Executive Officer,
Ameren Corporation
Alan B. Colberg
Retired President
and Chief
Executive Officer,
Assurant, Inc.
Dorothy Bridges
Chief Executive
Officer, Metropolitan
Economic Development
Association (Meda)
Elizabeth
L. Buse
Former Chief
Executive Officer,
Monitise plc
21
The following pages discuss in detail the financial results we achieved in 2024.
This report contains forward-looking statements about
U.S. Bancorp. Statements that are not historical or current
facts, including statements about beliefs and expectations,
are forward-looking statements and are based on the information
available to, and assumptions and estimates made by, management
as of the date hereof. These forward-looking statements cover,
among other things, future economic conditions and the anticipated
future revenue, expenses, financial condition, asset quality,
capital and liquidity levels, plans, prospects and operations of
U.S. Bancorp. Forward-looking statements often use words such
as “anticipates,” “targets,” “expects,” “hopes,” “estimates,”
“projects,” “forecasts,” “intends,” “plans,” “goals,” “believes,”
“continue” and other similar expressions or future or conditional
verbs such as “will,” “may,” “might,” “should,” “would” and “could.”
Forward-looking statements involve inherent risks and uncertainties
that could cause actual results to differ materially from those set
forth in forward-looking statements, including the following risks
and uncertainties:
• Deterioration in general business and economic conditions or
turbulence in domestic or global financial markets, which could
adversely affect U.S. Bancorp’s revenues and the values of its
assets and liabilities, reduce the availability of funding to certain
financial institutions, lead to a tightening of credit, and increase
stock price volatility;
• Turmoil and volatility in the financial services industry, including
failures or rumors of failures of other depository institutions,
which could affect the ability of depository institutions, including
U.S. Bank National Association, to attract and retain depositors,
and could affect the ability of financial services providers, including
U.S. Bancorp, to borrow or raise capital;
• Increases in Federal Deposit Insurance Corporation (FDIC)
assessments, including due to bank failures;
• Actions taken by governmental agencies to stabilize the financial
system and the effectiveness of such actions;
• Uncertainty regarding the content, timing and impact of changes
to regulatory capital, liquidity and resolution-related requirements
applicable to large banking organizations in response to adverse
developments affecting the banking sector;
• Changes to statutes, regulations, or regulatory policies or
practices, including capital and liquidity requirements, and the
enforcement and interpretation of such laws and regulations, and
U.S. Bancorp’s ability to address or satisfy those requirements and
other requirements or conditions imposed by regulatory entities;
• Changes in trade policy, including the imposition of tariffs or the
impacts of retaliatory tariffs;
• Changes in interest rates;
• Increases in unemployment rates;
• Deterioration in the credit quality of U.S. Bancorp's loan portfolios
or in the value of the collateral securing those loans;
• Changes in commercial real estate occupancy rates;
• 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,
technology or security systems or infrastructure, or those of third
parties, including as a result of cybersecurity incidents;
• Failures to safeguard personal information;
• Impacts of pandemics, 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 this report.
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.
22 Management’s Discussion and Analysis
22
Overview
24
Statement of Income Analysis
27
Balance Sheet Analysis
33
Corporate Risk Profile
33
Overview
34
Credit Risk Management
45
Residual Value Risk Management
45
Operational Risk Management
46
Compliance Risk Management
46
Interest Rate Risk Management
47
Market Risk Management
48
Liquidity Risk Management
52
Capital Management
54
Business Segment Financial Review
57
Non-GAAP Financial Measures
59
Accounting Changes
59
Critical Accounting Policies
61
Controls and Procedures
62 Reports of Management and Independent Accountants
66 Consolidated Financial Statements and Notes
134 Consolidated Daily Average Balance Sheet and
Related Yields and Rates
135 Supplemental Financial Data
136 Company Information
136 Risk Factors
152 Managing Committee
154 Directors
The following information appears in accordance with the Private Securities Litigation Reform Act of 1995:
Management’s Discussion and Analysis
Overview
U.S. Bancorp and its subsidiaries (the “Company”)
continued to demonstrate financial discipline and a well-
diversified business model in 2024. Financial results for
2024 included fee revenue growth, prudent expense
management, stable credit quality and the accretion of
common equity tier 1 capital of 70 basis points. During
2024, the Company continued to effectively manage its
balance sheet while expanding interconnectedness across
its businesses.
Financial Performance The Company earned $6.3 billion
in 2024, or $3.79 per diluted common share, compared
with $5.4 billion, or $3.27 per diluted common share in
2023.
Financial performance for 2024, compared with 2023,
included the following:
• Net interest income decreased $1.1 billion (6.4 percent)
due to the impact of higher interest rates on deposit mix
and pricing, partially offset by modest growth in earning
assets and improved asset mix;
• Noninterest income increased $429 million (4.0 percent)
primarily due to higher trust and investment management
fees, commercial products revenue, payment services
revenue and mortgage banking revenue;
• Noninterest expense decreased $1.7 billion (8.9
percent), reflecting lower merger and integration charges
and lower FDIC special assessment charges, partially
offset by higher compensation and employee benefits
expense;
• The provision for credit losses decreased $37 million (1.6
percent), reflecting stabilizing economic and credit
trends;
• Average loans decreased $7.4 billion (1.9 percent)
driven by decreases in other retail loans, commercial real
estate loans and commercial loans, partially offset by
increases in credit card loans and residential mortgages;
and
• Average deposits increased $3.9 billion (0.8 percent),
driven by increases in average total savings deposits
and time deposits, partially offset by a decrease in
average noninterest-bearing deposits.
Credit Quality The Company continued to prudently
manage credit underwriting.
• The allowance for credit losses was $7.9 billion at
December 31, 2024, an increase of $86 million (1.1
percent) compared with December 31, 2023. The
increase was primarily driven by period-end loan growth.
• Nonperforming assets were $1.8 billion at December 31,
2024, an increase of $338 million (22.6 percent)
compared with December 31, 2023. The increase was
primarily due to higher nonperforming commercial and
commercial real estate loans.
• Net charge-offs were $2.2 billion in 2024, an increase of
$247 million (13.0 percent) compared with 2023. The
increase reflected higher credit card and commercial
loan net charge-offs, partially offset by the impacts in the
prior year of charge-offs on acquired loans and charge-
offs related to balance sheet repositioning and capital
management actions.
Capital Management At December 31, 2024, all of the
Company’s regulatory capital ratios exceeded regulatory
“well-capitalized” requirements.
• The Company’s common equity tier 1 capital ratio was
10.6 percent at December 31, 2024, an increase of 70
basis points from December 31, 2023.
• The Company resumed share repurchases in the fourth
quarter of 2024, as part of a new $5.0 billion share
repurchase program.
Earnings Summary The Company reported net income
attributable to U.S. Bancorp of $6.3 billion in 2024, or $3.79
per diluted common share, compared with $5.4 billion, or
$3.27 per diluted common share, in 2023. Return on
average assets and return on average common equity were
0.95 percent and 11.7 percent, respectively, in 2024,
compared with 0.82 percent and 10.8 percent,
respectively, in 2023. The results for 2024 included the
impact of $400 million ($300 million net-of-tax) of notable
items, including $155 million of merger and integration
charges associated with the 2022 acquisition of MUFG
Union Bank, N.A. (“MUB”), $136 million of incremental FDIC
special assessment charges and $109 million of charges
related to lease impairments and operational efficiency
actions. Combined, these items decreased 2024 diluted
earnings per common share by $0.19. The results for 2023
included the impacts of $2.2 billion ($1.6 billion net-of-tax)
of notable items, including $1.0 billion of merger and
integration charges related to the MUB acquisition, $734
million of FDIC special assessment charges, $243 million of
provision for credit losses related to balance sheet
repositioning and capital management actions, $140 million
of securities losses related to balance sheet repositioning,
a $110 million charitable contribution to support a
community benefit plan related to the MUB acquisition, and
a $70 million discrete tax benefit. Combined, these items
decreased 2023 diluted earnings per common share by
$1.04.
22 U.S. Bancorp 2024 Annual Report
TABLE 1 Selected Financial Data
Year Ended December 31
(Dollars and Shares in Millions, Except Per Share Data)
2024
2023
2022
Condensed Income Statement
Net interest income
$ 16,289
$ 17,396
$ 14,728
Taxable-equivalent adjustment(a)
120
131
118
Net interest income (taxable-equivalent basis)(b)
16,409
17,527
14,846
Noninterest income
11,046
10,617
9,456
Total net revenue
27,455
28,144
24,302
Noninterest expense
17,188
18,873
14,906
Provision for credit losses
2,238
2,275
1,977
Income before taxes
8,029
6,996
7,419
Income taxes and taxable-equivalent adjustment
1,700
1,538
1,581
Net income
6,329
5,458
5,838
Net (income) loss attributable to noncontrolling interests
(30)
(29)
(13)
Net income attributable to U.S. Bancorp
$
6,299
$
5,429
$
5,825
Net income applicable to U.S. Bancorp common shareholders
$
5,909
$
5,051
$
5,501
Per Common Share
Earnings per share
$
3.79
$
3.27
$
3.69
Diluted earnings per share
3.79
3.27
3.69
Dividends declared per share
1.98
1.93
1.88
Book value per share(c)
33.19
31.13
28.71
Market value per share
47.83
43.28
43.61
Average common shares outstanding
1,560
1,543
1,489
Average diluted common shares outstanding
1,561
1,543
1,490
Financial Ratios
Return on average assets
.95 %
.82 %
.98 %
Return on average common equity
11.7
10.8
12.6
Return on tangible common equity(b)
17.2
16.9
17.0
Net interest margin (taxable-equivalent basis)(a)
2.70
2.90
2.72
Efficiency ratio(b)
62.3
66.7
61.4
Net charge-offs as a percent of average loans outstanding
.58
.50
.32
Average Balances
Loans
$ 373,875
$ 381,275
$ 333,573
Investment securities(d)
166,634
162,757
169,442
Earning assets
606,641
605,199
545,343
Assets
664,014
663,440
592,149
Noninterest-bearing deposits
83,007
107,768
120,394
Deposits
509,515
505,663
462,384
Short-term borrowings
17,201
34,141
25,740
Long-term debt
54,473
44,142
33,114
Total U.S. Bancorp shareholders’ equity
57,206
53,660
50,416
Period End Balances
Loans
$ 379,832
$ 373,835
$ 388,213
Investment securities
164,626
153,751
161,650
Assets
678,318
663,491
674,805
Deposits
518,309
512,312
524,976
Long-term debt
58,002
51,480
39,829
Total U.S. Bancorp shareholders’ equity
58,578
55,306
50,766
Asset Quality
Nonperforming assets
$
1,832
$
1,494
$
1,016
Allowance for credit losses
7,925
7,839
7,404
Allowance for credit losses as a percentage of period-end loans
2.09 %
2.10 %
1.91 %
Capital Ratios
Common equity tier 1 capital
10.6 %
9.9 %
8.4 %
Tier 1 capital
12.2
11.5
9.8
Total risk-based capital
14.3
13.7
11.9
Leverage
8.3
8.1
7.9
Total leverage exposure
6.8
6.6
6.4
Tangible common equity to tangible assets(b)
5.8
5.3
4.5
Tangible common equity to risk-weighted assets(b)
8.5
7.7
6.0
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the
current expected credit losses methodology(b)
10.5
9.7
8.1
(a) 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.
(b) See Non-GAAP Financial Measures beginning on page 57.
(c) Calculated as U.S. Bancorp common shareholders’ equity divided by common shares outstanding at end of the period.
(d) Excludes unrealized gains and losses on available-for-sale investment securities and any premiums or discounts recorded related to the transfer of investment securities at fair
value from available-for-sale to held-to-maturity.
23
Total net revenue for 2024 was $689 million (2.4
percent) lower than 2023, reflecting a 6.4 percent decrease
in net interest income and a 4.0 percent increase in
noninterest income. The decrease in net interest income
from the prior year was primarily due to the impact of higher
interest rates on deposit mix and pricing, partially offset by
modest growth in earning assets and improved asset mix.
The increase in noninterest income was driven by higher
fee revenue across most categories, partially offset by
lower service charges and lower other noninterest income.
Noninterest expense in 2024 was $1.7 billion (8.9
percent) lower than 2023, primarily due to lower merger
and integration charges and lower FDIC special
assessment charges, partially offset by higher
compensation and employee benefits expense.
Results for 2023 Compared With 2022 For discussion
related to changes in financial condition and results of
operations for 2023 compared with 2022, refer to
“Management’s Discussion and Analysis” in the Company’s
Annual Report for the year ended December 31, 2023,
included as Exhibit 13 to the Company’s Form 10-K filed
with the Securities and Exchange Commission ("SEC") on
February 20, 2024.
TABLE 2 Analysis of Net Interest Income(a)
Year Ended December 31 (Dollars in Millions)
Statement of Income Analysis
Net Interest Income Net interest income, on a taxable-
equivalent basis, was $16.4 billion in 2024, compared with
$17.5 billion in 2023. The $1.1 billion (6.4 percent)
decrease in 2024 compared with 2023 was primarily due to
the impact of higher interest rates on deposit mix and
pricing, partially offset by modest growth in earning assets
and improved asset mix. Average earning assets were $1.4
billion (0.2 percent) higher in 2024, compared with 2023,
reflecting increases in investment securities, interest-
bearing deposits with banks and other earning assets,
partially offset by a decrease in loans. The net interest
margin, on a taxable-equivalent basis, in 2024 was 2.70
percent, compared with 2.90 percent in 2023. The
decrease in the net interest margin in 2024, compared with
2023, was primarily due to the impact of higher interest
rates on deposit mix and pricing, partially offset by
improved earning asset mix across loans and investment
securities. Refer to the “Interest Rate Risk Management”
section for further information on the sensitivity of the
Company’s net interest income to changes in interest rates.
2024
2023
2024
2023
2022
v 2023
v 2022
Components of Net Interest Income
Income on earning assets (taxable-equivalent basis)
$ 31,789
$ 30,144
$ 18,066
$ 1,645
$ 12,078
Expense on interest-bearing liabilities (taxable-equivalent basis)
15,380
12,617
3,220
2,763
9,397
Net interest income (taxable-equivalent basis)(b)
$ 16,409
$ 17,527
$ 14,846
$ (1,118)
$ 2,681
Net interest income, as reported
$ 16,289
$ 17,396
$ 14,728
$ (1,107)
$ 2,668
Average Yields and Rates Paid
Earning assets yield (taxable-equivalent basis)
5.24 %
4.98 %
3.31 %
.26 %
1.67 %
Rate paid on interest-bearing liabilities (taxable-equivalent basis)
3.09
2.65
.80
.44
1.85
Gross interest margin (taxable-equivalent basis)
2.15 %
2.33 %
2.51 %
(.18)%
(.18)%
Net interest margin (taxable-equivalent basis)
2.70 %
2.90 %
2.72 %
(.20)%
.18 %
Average Balances
Investment securities(c)
$ 166,634
$ 162,757
$ 169,442
$ 3,877
$ (6,685)
Loans
373,875
381,275
333,573
(7,400)
47,702
Earning assets
606,641
605,199
545,343
1,442
59,856
Noninterest-bearing deposits
83,007
107,768
120,394
(24,761)
(12,626)
Interest-bearing deposits
426,508
397,895
341,990
28,613
55,905
Total deposits
509,515
505,663
462,384
3,852
43,279
Interest-bearing liabilities
498,182
476,178
400,844
22,004
75,334
(a) Interest and rates are presented on a fully taxable-equivalent basis based on a federal income tax rate of 21 percent.
(b) See Non-GAAP Financial Measures beginning on page 57.
(c) Excludes unrealized gains and losses on available-for-sale investment securities and any premiums or discounts recorded related to the transfer of investment securities at fair
value from available-for-sale to held-to-maturity.
24 U.S. Bancorp 2024 Annual Report
Average total loans were $373.9 billion in 2024,
compared with $381.3 billion in 2023. The $7.4 billion (1.9
percent) decrease was primarily due to lower other retail
loans, commercial real estate loans and commercial loans,
partially offset by higher credit card loans and residential
mortgages. Average other retail loans decreased $6.2
billion (12.5 percent), driven by lower automobile loans.
Average commercial real estate loans decreased $3.0
billion (5.5 percent), primarily due to loan workout activities
and payoffs exceeding a reduced level of new originations.
Average commercial loans decreased $1.5 billion (1.1
percent), primarily due to decreased demand as corporate
customers accessed the capital markets. Average credit
card loans increased $2.1 billion (8.0 percent) primarily due
to customer account growth and higher spend volume.
Average residential mortgages increased $1.1 billion (1.0
percent), driven by originations.
Average investment securities in 2024 were $3.9 billion
(2.4 percent) higher than in 2023, primarily due to balance
sheet positioning and liquidity management.
Average total deposits for 2024 were $3.9 billion (0.8
percent) higher than 2023. Average total savings deposits
were $18.3 billion (5.2 percent) higher in 2024, compared
with 2023, driven by increases in balances within Wealth,
Corporate, Commercial and Institutional Banking, along
with Consumer and Business Banking. Average time
deposits for 2024 were $10.3 billion (22.1 percent) higher
than 2023, primarily due to increases in Consumer and
Business Banking balances. 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
noninterest-bearing deposits were $24.8 billion (23.0
percent) lower in 2024, compared with 2023, driven by
lower balances within Wealth, Corporate, Commercial and
Institutional Banking, as well as Consumer and Business
Banking.
TABLE 3 Net Interest Income — Changes Due to Rate and Volume(a)
2024 v 2023
2023 v 2022
Year Ended December 31 (Dollars in Millions)
Volume Yield/Rate
Total
Volume Yield/Rate
Total
Increase (decrease) in
Interest Income
Investment securities
$
109 $
514 $
623 $
(136) $ 1,245 $ 1,109
Loans held for sale
5
21
26
(72)
18
(54)
Loans
Commercial
(94)
149
55
389
3,933
4,322
Commercial real estate
(185)
127
(58)
546
1,183
1,729
Residential mortgages
41
231
272
1,019
511
1,530
Credit card
273
113
386
340
506
846
Other retail
(325)
345
20
(424)
731
307
Total loans
(290)
965
675
1,870
6,864
8,734
Interest-bearing deposits with banks
117
46
163
313
1,709
2,022
Other earning assets
130
28
158
76
191
267
Total earning assets
71
1,574
1,645
2,051
10,027
12,078
Interest Expense
Interest-bearing deposits
Interest checking
(41)
212
171
28
1,029
1,057
Money market savings
1,300
626
1,926
388
4,046
4,434
Savings accounts
(26)
101
75
(2)
82
80
Time deposits
375
366
741
192
1,140
1,332
Total interest-bearing deposits
1,608
1,305
2,913
606
6,297
6,903
Short-term borrowings
(981)
113
(868)
186
1,223
1,409
Long-term debt
436
282
718
259
826
1,085
Total interest-bearing liabilities
1,063
1,700
2,763
1,051
8,346
9,397
Increase (decrease) in net interest income
$
(992) $
(126) $ (1,118) $ 1,000 $ 1,681 $ 2,681
(a) This table shows the components of the change in net interest income by volume and rate on a taxable-equivalent basis based on a federal income tax rate of 21 percent. This
table does not take into account the level of noninterest-bearing funding, nor does it fully reflect changes in the mix of assets and liabilities. The change in interest not solely due to
changes in volume or rates has been allocated on a pro-rata basis to volume and yield/rate.
25
Provision for Credit Losses The provision for credit losses
reflects changes in economic conditions and the size and
credit quality of the entire portfolio of loans. The Company
maintains an allowance for credit losses considered
appropriate by management for expected losses, based on
factors discussed in the “Analysis and Determination of the
Allowance for Credit Losses” section.
The provision for credit losses was $2.2 billion in 2024,
compared with $2.3 billion in 2023. The $37 million (1.6
percent) decrease reflects stabilizing economic and credit
trends. Net charge-offs increased $247 million (13.0
TABLE 4 Noninterest Income
Year Ended December 31 (Dollars in Millions)
percent) in 2024, compared with 2023, reflecting higher
credit card and commercial loan net charge-offs, partially
offset by the impacts of charge-offs in the prior year related
to acquired loans and balance sheet repositioning and
capital management actions.
Refer to “Corporate Risk Profile” for further information
on the provision for credit losses, net charge-offs,
nonperforming assets and other factors considered by the
Company in assessing the credit quality of the loan portfolio
and establishing the allowance for credit losses.
2024
2023
2024
2023
2022
v 2023
v 2022
Card revenue
$ 1,679 $ 1,630 $ 1,512
3.0 %
7.8 %
Corporate payment products revenue
773
759
698
1.8
8.7
Merchant processing services
1,714
1,659
1,579
3.3
5.1
Trust and investment management fees
2,660
2,459
2,209
8.2
11.3
Service charges
1,253
1,306
1,298
(4.1)
.6
Commercial products revenue
1,523
1,372
1,105
11.0
24.2
Mortgage banking revenue
627
540
527
16.1
2.5
Investment products fees
330
279
235
18.3
18.7
Other
641
758
273
(15.4)
*
Total fee revenue
11,200
10,762
9,436
4.1
14.1
Securities gains (losses), net
(154)
(145)
20
(6.2)
*
Total noninterest income
$11,046 $10,617 $ 9,456
4.0 %
12.3 %
*
Not meaningful
Noninterest Income Noninterest income in 2024 was $11.0
billion, compared with $10.6 billion in 2023. The $429
million (4.0 percent) increase in 2024 from 2023 reflected
higher trust and investment management fees, commercial
products revenue, payment services revenue and
mortgage banking revenue, partially offset by lower service
charges and other noninterest income. Trust and
investment management fees increased primarily due to
business growth and favorable market conditions.
TABLE 5 Noninterest Expense
Commercial products revenue increased primarily due to
higher corporate bond fees. Payment services revenue
increased primarily driven by higher merchant processing
services revenue due to business volume growth, along
with increased card revenue due to favorable rates.
Mortgage banking revenue increased primarily due to a
gain on the sale of mortgage servicing rights in 2024, along
with the impact of balance sheet repositioning and capital
management actions taken in 2023.
2024
2023
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
v 2023
v 2022
Compensation and employee benefits
$10,554
$10,416
$ 9,157
1.3 %
13.7 %
Net occupancy and equipment
1,246
1,266
1,096
(1.6)
15.5
Professional services
491
560
529
(12.3)
5.9
Marketing and business development
619
726
456
(14.7)
59.2
Technology and communications
2,074
2,049
1,726
1.2
18.7
Other intangibles
569
636
215
(10.5)
*
Other
1,480
2,211
1,398
(33.1)
58.2
Total before merger and integration charges
17,033
17,864
14,577
(4.7)
22.5
Merger and integration charges
155
1,009
329
(84.6)
*
Total noninterest expense
$17,188
$18,873
$14,906
(8.9)%
26.6 %
Efficiency ratio(a)
62.3 %
66.7 %
61.4 %
*
Not meaningful
(a) See Non-GAAP Financial Measures beginning on page 57.
26 U.S. Bancorp 2024 Annual Report
Noninterest Expense Noninterest expense in 2024 was
$17.2 billion, compared with $18.9 billion in 2023. The $1.7
billion (8.9 percent) decrease in noninterest expense in
2024, compared to 2023, reflected lower merger and
integration charges, lower other noninterest expense and
lower marketing and business development expense,
partially offset by higher compensation and employee
benefits expense. Other noninterest expense decreased
primarily due to lower FDIC special assessment charges in
2024. Marketing and business development expense
decreased primarily due to the impact of a charitable
contribution in 2023 related to the MUB acquisition.
Compensation and employee benefits expense increased
primarily due to higher commissions, performance-based
incentives and medical expenses.
Income Tax Expense The provision for income taxes was
$1.6 billion (an effective rate of 20.0 percent) in 2024,
compared with $1.4 billion (an effective rate of 20.5
percent) in 2023.
For further information on income taxes, refer to Note 18
of the Notes to Consolidated Financial Statements.
TABLE 6 Loan Portfolio Distribution
Balance Sheet Analysis
Average earning assets were $606.6 billion in 2024,
compared with $605.2 billion in 2023. The increase in
average earning assets of $1.4 billion (0.2 percent) was
primarily due to increases in investment securities of $3.9
billion (2.4 percent), interest-bearing deposits with banks of
$2.2 billion (4.5 percent) and other earning assets of $2.7
billion (27.5 percent), partially offset by a decrease in loans
of $7.4 billion (1.9 percent).
For average balance information, refer to the "Net
Interest Income" section in Statement of Income Analysis
and Consolidated Daily Average Balance Sheet and
Related Yields and Rates on page 134.
Loans The Company’s loan portfolio was $379.8 billion at
December 31, 2024, compared with $373.8 billion at
December 31, 2023, reflecting an increase of $6.0 billion
(1.6 percent). The increase was driven by higher
commercial loans, residential mortgages and credit card
loans, partially offset by lower commercial real estate loans
and other retail loans. Table 6 provides a summary of the
loan distribution by product type, while Table 7 provides a
summary of the selected loan maturity distribution by loan
category.
2024
2023
Percent
Percent
At December 31 (Dollars in Millions)
Amount
of Total
Amount
of Total
Commercial
Commercial
$ 135,254
35.6 % $ 127,676
34.2 %
Lease financing
4,230
1.1
4,205
1.1
Total commercial
139,484
36.7
131,881
35.3
Commercial Real Estate
Commercial mortgages
38,619
10.2
41,934
11.2
Construction and development
10,240
2.7
11,521
3.1
Total commercial real estate
48,859
12.9
53,455
14.3
Residential Mortgages
Residential mortgages
112,806
29.7
108,605
29.0
Home equity loans, first liens
6,007
1.6
6,925
1.9
Total residential mortgages
118,813
31.3
115,530
30.9
Credit Card
30,350
8.0
28,560
7.6
Other Retail
Retail leasing
4,040
1.0
4,135
1.1
Home equity and second mortgages
13,565
3.6
13,056
3.5
Revolving credit
3,747
1.0
3,668
1.0
Installment
14,373
3.8
13,889
3.7
Automobile
6,601
1.7
9,661
2.6
Total other retail
42,326
11.1
44,409
11.9
Total loans
$ 379,832
100.0 % $ 373,835
100.0 %
27
TABLE 7 Selected Loan Maturity Distribution
Over One
Over Five
One Year
Through
Through
Over Fifteen
At December 31, 2024 (Dollars in Millions)
or Less
Five Years
Fifteen Years
Years
Total
Commercial
$
40,939 $
84,587 $
13,578 $
380
$
139,484
Commercial real estate
14,961
20,138
5,274
8,486 (a)
48,859
Residential mortgages
215
2,282
6,159
110,157
118,813
Credit card
30,350
—
—
—
30,350
Other retail
1,836
9,502
13,657
17,331
42,326
Total loans
$
88,301 $
116,509 $
38,668 $
136,354
$
379,832
Total of loans due after one year with:
Predetermined
Floating
Interest Rates
Interest Rates
Commercial
$
13,759
$
84,786
Commercial real estate
11,543
22,355
Residential mortgages
60,578
58,020
Credit card
—
—
Other retail
27,870
12,620
Total
$
113,750
$
177,781
(a) Primarily represents construction loans for single-family residences or loans guaranteed by the Small Business Administration.
TABLE 8 Commercial Loans by Industry Group
2024
2023
Percent
Percent
At December 31 (Dollars in Millions)
Loans
of Total
Loans
of Total
Industry Group
Financial institutions
$
25,468
18.3 % $
20,016
15.2 %
Real-estate related
17,446
12.5
19,108
14.5
Automotive
11,069
7.9
6,678
5.1
Personal, professional and commercial services
9,776
7.0
10,273
7.8
Healthcare
6,919
5.0
8,240
6.2
Media and entertainment
6,267
4.5
6,265
4.8
Retail
5,181
3.7
4,970
3.8
Capital goods
4,673
3.3
5,315
4.0
Transportation
4,591
3.3
4,467
3.4
Power
3,952
2.8
3,435
2.6
Food and beverage
3,931
2.8
4,053
3.1
Technology
3,693
2.6
3,963
3.0
Energy
3,577
2.6
3,744
2.8
Metals and mining
3,543
2.5
3,332
2.5
Building materials
3,029
2.2
3,008
2.3
State and municipal government
3,023
2.2
3,217
2.4
Education and non-profit
2,921
2.1
3,330
2.5
Agriculture
1,779
1.3
1,778
1.3
Other
18,646
13.4
16,689
12.7
Total
$ 139,484
100.0 % $ 131,881
100.0 %
Commercial Commercial loans, including lease financing,
in corporate banking. Table 8 provides a summary of
increased $7.6 billion (5.8 percent) at December 31, 2024,
commercial loans by industry group.
compared with December 31, 2023, primarily due to growth
28 U.S. Bancorp 2024 Annual Report
TABLE 9 Commercial Real Estate Loans by Property Type and Geography
2024
2023
At December 31 (Dollars in Millions)
Loans
Percent
of Total
Loans
Percent
of Total
Property Type
Multi-family
$
17,678
36.2 % $
17,786
33.3 %
Business owner occupied
10,500
21.5
10,795
20.2
Office
5,601
11.5
6,948
13.0
Industrial
4,791
9.8
5,608
10.5
Residential land and development
3,659
7.5
4,419
8.3
Retail
3,498
7.1
3,806
7.1
Lodging
1,156
2.4
1,661
3.1
Other
1,976
4.0
2,432
4.5
Total
$
48,859
100.0 % $
53,455
100.0 %
Geography
California
$
17,990
36.8 % $
20,130
37.7 %
Washington
4,607
9.4
4,245
7.9
Texas
2,366
4.8
2,669
5.0
Florida
1,726
3.5
1,843
3.4
Oregon
1,673
3.4
1,809
3.4
Colorado
1,515
3.1
1,476
2.8
Illinois
1,431
2.9
1,516
2.8
Minnesota
1,313
2.8
1,497
2.8
Wisconsin
1,177
2.4
1,266
2.4
New York
1,160
2.4
1,273
2.4
All other states
13,901
28.5
15,731
29.4
Total
$
48,859
100.0 % $
53,455
100.0 %
Commercial Real Estate The Company’s portfolio of
commercial real estate loans, which includes commercial
mortgages and construction and development loans,
decreased $4.6 billion (8.6 percent) at December 31, 2024,
compared with December 31, 2023. The decrease was
primarily due to loan workout activities and payoffs
exceeding a reduced level of new originations. Table 9
provides a summary of commercial real estate loans by
property type and geographical location.
The Company also finances the operations of real estate
developers and other entities with operations related to real
estate. These loans are not secured directly by real estate
but have similar characteristics to commercial real estate
loans. These loans were included in the commercial loan
category and totaled $17.4 billion and $19.1 billion at
December 31, 2024 and 2023, respectively.
29
TABLE 10 Residential Mortgages by Geography
2024
2023
Percent
Percent
At December 31 (Dollars in Millions)
Loans
of Total
Loans
of Total
California
$
53,682
45.2 % $
52,584
45.5 %
Washington
6,829
5.8
6,678
5.8
Florida
3,947
3.3
3,767
3.3
Colorado
3,737
3.1
3,881
3.4
Illinois
3,452
2.9
3,630
3.1
Minnesota
3,357
2.9
3,600
3.1
Texas
3,312
2.8
3,287
2.8
New York
3,129
2.6
2,726
2.4
Arizona
3,088
2.6
3,134
2.7
Massachusetts
2,737
2.3
2,680
2.3
All other states
31,543
26.5
29,563
25.6
Total
$ 118,813
100.0 % $ 115,530
100.0 %
Residential Mortgages Residential mortgages held in the
loan portfolio at December 31, 2024, increased $3.3 billion
(2.8 percent) compared to December 31, 2023, driven by
originations. Residential mortgages originated and placed
in the Company’s loan portfolio include jumbo mortgages
and branch-originated first lien home equity loans to
borrowers with high credit quality.
Credit Card Total credit card loans increased $1.8 billion
(6.3 percent) at December 31, 2024, compared with
December 31, 2023, primarily driven by customer account
growth and higher spend volume.
TABLE 11 Credit Card Loans by Geography
Other Retail Total other retail loans, which include retail
leasing, home equity and second mortgages and other
retail loans, decreased $2.1 billion (4.7 percent) at
December 31, 2024, compared with December 31, 2023,
driven by a decrease in automobile loans. Tables 10, 11
and 12 provide a geographic summary of residential
mortgages, credit card loans and other retail loans
outstanding, respectively, as of December 31, 2024 and
2023.
2024
2023
Percent
Percent
At December 31 (Dollars in Millions)
Loans
of Total
Loans
of Total
California
$
3,289
10.8 % $
2,928
10.3 %
Texas
1,819
6.0
1,719
6.0
Illinois
1,557
5.1
1,472
5.2
Florida
1,479
4.9
1,363
4.8
Ohio
1,468
4.8
1,406
4.9
Minnesota
1,371
4.5
1,333
4.7
Wisconsin
1,220
4.0
1,177
4.1
Colorado
1,021
3.4
964
3.3
Missouri
960
3.2
918
3.2
Washington
947
3.1
889
3.1
All other states
15,219
50.2
14,391
50.4
Total
$
30,350
100.0 % $
28,560
100.0 %
30 U.S. Bancorp 2024 Annual Report
TABLE 12 Other Retail Loans by Geography
2024
2023
Percent
Percent
At December 31 (Dollars in Millions)
Loans
of Total
Loans
of Total
California
$
9,179
21.7 % $
9,506
21.4 %
Texas
2,995
7.1
3,505
7.9
Florida
2,675
6.3
2,729
6.1
Washington
1,746
4.1
1,800
4.1
Minnesota
1,742
4.1
1,943
4.4
Ohio
1,520
3.6
1,752
3.9
Illinois
1,435
3.4
1,704
3.8
Colorado
1,340
3.2
1,440
3.2
New York
1,329
3.1
1,444
3.3
Oregon
1,259
3.0
1,313
3.0
All other states
17,106
40.4
17,273
38.9
Total
$
42,326
100.0 % $
44,409
100.0 %
The Company generally retains portfolio loans through
maturity; however, the Company’s intent may change over
time based upon various factors such as ongoing asset/
liability management activities, assessment of product
profitability, credit risk, liquidity needs, and capital
implications. If the Company’s intent or ability to hold an
existing portfolio loan changes, it is transferred to loans
held for sale.
Loans Held for Sale Loans held for sale, consisting
primarily of residential mortgages to be sold in the
TABLE 13 Investment Securities
secondary market, were $2.6 billion at December 31, 2024,
compared with $2.2 billion at December 31, 2023. The
increase in loans held for sale was principally due to a
higher level of mortgage loan closings in the fourth quarter
of 2024, compared with the fourth quarter of 2023. Almost
all of the residential mortgage loans the Company
originates or purchases for sale follow guidelines that allow
the loans to be sold into existing, highly liquid secondary
markets, in particular in government agency transactions
and to government sponsored enterprises (“GSEs”).
2024
2023
Weighted-
Weighted-
Average Weighted-
Average Weighted-
Amortized
Maturity in
Average Amortized
Maturity in
Average
At December 31 (Dollars in Millions)
Cost
Fair Value
Years
Yield(e)
Cost
Fair Value
Years
Yield(e)
Held-to-Maturity
U.S. Treasury and agencies
$ 1,296 $ 1,275
1.3
2.85 % $ 1,345 $ 1,310
2.3
2.85 %
Mortgage-backed securities(a)
77,094
64,753
8.8
2.19
82,692
72,770
8.8
2.21
Other
244
247
2.2
2.73
8
8
2.8
2.56
Total held-to-maturity
$ 78,634 $ 66,275
8.7
2.20 % $ 84,045 $ 74,088
8.7
2.22 %
Available-for-Sale
U.S. Treasury and agencies
$ 30,467 $ 28,387
5.1
2.98 % $ 21,768 $ 19,542
5.9
2.19 %
Mortgage-backed securities(a)
44,238
40,638
7.4
3.82
36,895
33,427
6.3
3.09
Asset-backed securities(a)
7,136
7,165
3.8
5.56
6,713
6,724
2.2
5.33
Obligations of state and political subdivisions(b)(c)
10,690
9,552
11.7
3.72
10,867
9,989
9.9
3.75
Other
249
250
1.5
4.79
24
24
1.7
4.51
Total available-for-sale(d)
$ 92,780 $ 85,992
6.8
3.67 % $ 76,267 $ 69,706
6.3
3.12 %
(a) Information related to asset and mortgage-backed securities included above is presented based upon weighted-average maturities that take into account anticipated future
prepayments.
(b) Information related to obligations of state and political subdivisions is presented based upon yield to first optional call date if the security is purchased at a premium, and yield to
maturity if the security is purchased at par or a discount.
(c) Maturity calculations for obligations of state and political subdivisions are based on the first optional call date for securities with a fair value above par and the contractual maturity
date for securities with a fair value equal to or below par.
(d) Amortized cost excludes portfolio level basis adjustments of $13 million and $335 million at December 31, 2024 and 2023, respectively.
(e) Weighted-average yields for obligations of state and political subdivisions are presented on a fully-taxable equivalent basis based on a federal income tax rate of 21 percent. Yields
on investment securities are computed based on amortized cost balances, excluding any premiums or discounts recorded related to the transfer of investment securities at fair
value from available-for-sale to held-to-maturity.
31
Investment Securities The Company uses its investment
securities portfolio to manage interest rate risk, provide
liquidity (including the ability to meet regulatory
requirements), generate interest and dividend income, and
serve as collateral for public deposits and wholesale
funding sources. While the Company intends to hold its
investment securities indefinitely, it may sell available-for-
sale investment securities in response to structural changes
in the balance sheet and related interest rate risk and to
meet liquidity requirements, among other factors.
Investment securities totaled $164.6 billion at
December 31, 2024, compared with $153.8 billion at
December 31, 2023. The $10.9 billion (7.1 percent)
increase was primarily due to net investment purchases
driven by balance sheet positioning and liquidity
management, along with a favorable change in net
unrealized gains (losses) on available-for-sale investment
securities. Investment securities by type are shown in Table
13.
The Company’s available-for-sale investment securities
are carried at fair value with changes in fair value reflected
in other comprehensive income (loss) unless a portion of a
security’s unrealized loss is related to credit and an
allowance for credit losses is necessary. At December 31,
2024, the Company’s net unrealized losses on available-for-
sale investment securities were $6.8 billion ($5.1 billion net-
of-tax), compared with net unrealized losses of $6.9 billion
($5.2 billion net-of-tax) at December 31, 2023. The
favorable change in net unrealized gains (losses) was
primarily due to increases in the fair value of U.S. treasury
securities as a result of changes in interest rates. Gross
unrealized losses on available-for-sale investment
securities totaled $6.9 billion at December 31, 2024,
compared with $7.1 billion at December 31, 2023. When
evaluating credit losses, the Company considers various
factors such as the nature of the investment security, the
credit ratings or financial condition of the issuer, the extent
of the unrealized loss, expected cash flows of the
underlying collateral, the existence of any government or
agency guarantees, and market conditions. At
December 31, 2024, the Company had no plans to sell
securities with unrealized losses, and believes it is more
likely than not that it would not be required to sell such
securities before recovery of their amortized cost.
Refer to Notes 4 and 21 in the Notes to Consolidated
Financial Statements for further information on investment
securities.
Deposits Total deposits were $518.3 billion at
December 31, 2024, compared with $512.3 billion at
December 31, 2023. The $6.0 billion (1.2 percent) increase
in total deposits reflected increases in total savings
deposits and time deposits, partially offset by a decrease in
noninterest-bearing deposits.
Interest-bearing savings deposits increased $9.3 billion
(2.5 percent) at December 31, 2024, compared with
December 31, 2023. The increase was related to higher
money market and savings account deposit balances,
partially offset by lower interest checking deposit balances.
Money market deposit balances increased $7.4 billion (3.7
percent), primarily due to higher Wealth, Corporate,
Commercial and Institutional Banking balances. Savings
account balances increased $2.2 billion (5.0 percent),
driven by higher Consumer and Business Banking
balances. Interest checking balances decreased $265
million (0.2 percent) primarily due to lower Consumer and
Business Banking balances, partially offset by higher
Wealth, Corporate, Commercial and Institutional Banking
balances.
Time deposits at December 31, 2024, increased $2.5
billion (4.8 percent), compared with December 31, 2023,
driven by higher Consumer and Business Banking
balances. 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.
Noninterest-bearing deposits at December 31, 2024,
decreased $5.8 billion (6.5 percent) from December 31,
2023. The decrease was primarily driven by lower balances
within Wealth, Corporate, Commercial and Institutional
Banking, as well as Consumer and Business Banking, due
to the impact of higher interest rates.
32 U.S. Bancorp 2024 Annual Report
TABLE 14 Deposits
The composition of deposits was as follows:
2024
2023
Percent
Percent
At December 31 (Dollars in Millions)
Amount
of Total
Amount
of Total
Noninterest-bearing deposits
$
84,158
16.2 % $
89,989
17.6 %
Interest-bearing deposits
Interest checking
127,188
24.5
127,453
24.9
Money market savings
206,805
39.9
199,378
38.9
Savings accounts
45,389
8.8
43,219
8.4
Total savings deposits
379,382
73.2
370,050
72.2
Domestic time deposits less than $250,000
39,297
7.6
35,700
7.0
Domestic time deposits greater than $250,000
14,552
2.8
15,336
3.0
Foreign time deposits
920
.2
1,237
.2
Total interest-bearing deposits
434,151
83.8
422,323
82.4
Total deposits(a)
$ 518,309
100.0 % $ 512,312
100.0 %
(a) Includes $259.9 billion and $260.7 billion of deposits at December 31, 2024 and 2023, respectively, that are not subject to any federal, state or foreign deposit insurance program.
The maturity of domestic time deposits in excess of the insurance limit and those time deposits not subject to any federal, state
or foreign deposit insurance program at December 31, 2024 was as follows:
Domestic
Time
Deposits
Greater Than
Foreign Time
(Dollars in Millions)
$250,000
Deposits
Total
Three months or less
$
6,377 $
920 $
7,297
Three months through six months
5,950
—
5,950
Six months through one year
1,770
—
1,770
Thereafter
455
—
Total
$
14,552 $
920 $
15,472
Borrowings The Company utilizes both short-term and
long-term borrowings as part of its asset/liability
management and funding strategies. Short-term
borrowings, which include federal funds purchased,
commercial paper, repurchase agreements, borrowings
secured by high-grade assets and other short-term
borrowings, were $15.5 billion at December 31, 2024,
compared with $15.3 billion at December 31, 2023. The
$239 million (1.6 percent) increase in short-term borrowings
at December 31, 2024, compared with December 31, 2023,
was primarily due to increases in repurchase agreement
balances and short-term Federal Home Loan Bank
(“FHLB”) advances, partially offset by lower commercial
paper and other short-term borrowing balances.
Long-term debt was $58.0 billion at December 31, 2024,
compared with $51.5 billion at December 31, 2023. The
$6.5 billion (12.7 percent) increase was primarily due to
$6.5 billion of medium-term note and $1.8 billion of bank
note issuances and a $3.5 billion increase in FHLB
advances, partially offset by $4.6 billion of medium-term
note and $1.0 billion of subordinated note repayments.
Refer to Notes 12 and 13 of the Notes to Consolidated
Financial Statements for additional information regarding
short-term borrowings and long-term debt, and the
“Liquidity Risk Management” section for discussion of
liquidity management of the Company.
Corporate Risk Profile
Overview Managing risks is an essential part of
successfully operating a financial services company. The
Company’s Board of Directors has approved a risk
management framework which establishes governance and
risk management requirements for all risk-taking activities.
This framework includes Company and business line risk
appetite statements which set boundaries for the types and
amount of risk that may be undertaken in pursuing business
objectives and initiatives. The Board of Directors, primarily
through its Risk Management Committee, oversees
performance relative to the risk management framework,
risk appetite statements, and other policy requirements.
The Executive Risk Committee (“ERC”), which is chaired
by the Chief Risk Officer and includes the Chief Executive
Officer and other members of the executive management
team, oversees execution against the risk management
framework and risk appetite statements. The ERC focuses
on current and emerging risks, including strategic and
reputation risks, by directing timely and comprehensive
actions. Senior operating committees have also been
455
33
established, each responsible for overseeing a specified
category of risk.
The Company’s most prominent risk exposures are
credit, interest rate, market, liquidity, operational,
compliance, strategic, and reputation. Credit risk is the risk
of loss associated with a change in the credit profile or the
failure of a borrower or counterparty to meet its contractual
obligations. Interest rate risk is the current or prospective
risk to earnings and capital, or market valuations, arising
from the impact of changes in interest rates. Market risk is
the risk associated with fluctuations in interest rates, foreign
exchange rates, commodities and credit spreads that may
result in changes in the values of financial instruments,
such as trading and available-for-sale investment
securities, mortgage loans held for sale (“MLHFS”),
mortgage servicing rights (“MSRs”) and derivatives that are
accounted for on a fair value basis. Liquidity risk is the risk
that financial condition or overall safety and soundness is
adversely affected by the Company’s inability, or perceived
inability, to meet its cash flow obligations in a timely and
complete manner in either normal or stressed conditions.
Operational risk is the risk to current or projected financial
condition and resilience arising from inadequate or failed
internal processes or systems, people (including human
errors or misconduct), or adverse external events, including
the risk of loss resulting from breaches in data security.
Operational risk can also include the risk of loss due to
failures by third parties with which the Company does
business. Compliance risk is the risk that the Company may
suffer legal or regulatory sanctions, financial losses, and
reputational damage if it fails to adhere to compliance
requirements and the Company’s compliance policies.
Strategic risk is the risk to current or projected financial
condition and resilience arising from adverse business
decisions, poor implementation of business decisions, or
lack of responsiveness to changes in the banking industry
and operating environment. Reputation risk is the risk to
current or projected financial condition and resilience
arising from negative public opinion. This risk may impair
the Company’s competitiveness by affecting its ability to
establish new relationships or services, or continue
servicing existing relationships. In addition to the risks
identified above, other risk factors exist that may impact the
Company. Refer to “Risk Factors” beginning on page 136
for a detailed discussion of these factors.
The Company’s Board and management-level
governance committees are supported by a “three lines of
defense” model for establishing effective checks and
balances. The first line of defense, the business lines,
manages risks in conformity with established limits and
policy requirements. In turn, business line leaders and their
risk officers establish programs to ensure conformity with
these limits and policy requirements. The second line of
defense, which includes the Chief Risk Officer’s
organization as well as policy and oversight activities of
corporate support functions, translates risk appetite and
strategy into actionable risk limits and policies. The second
line of defense monitors first line of defense conformity with
limits and policies and provides reporting and escalation of
emerging risks and other concerns to senior management
and the Risk Management Committee of the Board of
Directors. The third line of defense, internal audit, is
responsible for providing the Audit Committee of the Board
of Directors and senior management with independent
assessment and assurance regarding the effectiveness of
the Company’s governance, risk management and control
processes.
Management regularly provides reports to the Risk
Management Committee of the Board of Directors. The Risk
Management Committee discusses with management the
Company’s risk management performance and provides a
summary of key risks to the entire Board of Directors,
covering the status of existing matters, areas of potential
future concern and specific information on certain types of
loss events. The Risk Management Committee considers
quarterly reports by management assessing the Company’s
performance relative to the risk appetite statements and the
associated risk limits, including:
• Macroeconomic environment and other qualitative
considerations, such as regulatory and compliance
changes, litigation developments, geopolitical events,
and technology and cybersecurity;
• Credit measures, including adversely rated and
nonperforming loans, leveraged transactions, credit
concentrations and lending limits;
• Interest rate and market risk, including market value and
net income simulation, and trading-related Value at Risk
(“VaR”);
• Liquidity risk, including funding projections under various
stressed scenarios;
• Operational and compliance risk, including losses
stemming from events such as fraud, processing errors,
control breaches, breaches in data security or adverse
business decisions, as well as reporting on technology
performance, and various legal and regulatory
compliance measures;
• Capital ratios and projections, including regulatory
measures and stressed scenarios; and
• Strategic and reputation risk considerations, impacts and
responses.
Credit Risk Management The Company’s strategy for
credit risk management includes well-defined, centralized
credit policies, uniform underwriting criteria, and ongoing
risk monitoring and review processes for all commercial
and consumer credit exposures. The strategy also
emphasizes diversification on a geographic, industry and
customer level, regular credit examinations and
management reviews of loans exhibiting deterioration of
credit quality. The Risk Management Committee oversees
the Company’s credit risk management process.
In addition, credit quality ratings, as defined by the
Company, are an important part of the Company’s overall
credit risk management and evaluation of its allowance for
credit losses. Loans with a pass rating represent those
loans not classified on the Company’s rating scale for
problem credits, as minimal credit risk has been identified.
Loans with a special mention or classified rating (defined
34 U.S. Bancorp 2024 Annual Report
by internally assessed rating or exception based monitoring
credits in consumer lending and small business loans that
are 90 days or more past due and still accruing, nonaccrual
loans and loans in a junior lien position that are current but
are behind a first lien position on nonaccrual), encompass
all loans held by the Company that it considers to have a
potential or well-defined weakness that may put full
collection of contractual cash flows at risk. The Company’s
internal credit quality ratings for consumer loans are
primarily based on delinquency and nonperforming status.
Refer to Notes 1 and 5 in the Notes to Consolidated
Financial Statements for further discussion of the
Company’s loan portfolios including internal credit quality
ratings.
The Company categorizes its loan portfolio into two
segments, which is the level at which it develops and
documents a systematic methodology to determine the
allowance for credit losses. The Company’s two loan
portfolio segments are commercial lending and consumer
lending.
The commercial lending segment includes loans and
leases made to small business, middle market, large
corporate, commercial real estate, financial institution, non-
profit and public sector customers. Key risk characteristics
relevant to commercial lending segment loans include the
industry and geography of the borrower’s business,
purpose of the loan, repayment source, borrower’s debt
capacity and financial flexibility, loan covenants, and nature
of pledged collateral, if any, as well as macroeconomic
factors such as unemployment rates, gross domestic
product levels, corporate bond spreads and long-term
interest rates. These risk characteristics, among others, are
considered in determining estimates about the likelihood of
default by the borrowers and the severity of loss in the
event of default. The Company considers these risk
characteristics in assigning internal risk ratings to, or
forecasting losses on, these loans, which are the significant
factors in determining the allowance for credit losses for
loans in the commercial lending segment.
The consumer lending segment represents loans and
leases made to consumer customers, including residential
mortgages, credit card loans, and other retail loans such as
revolving consumer lines, auto loans and leases and home
equity loans and lines. Key risk characteristics relevant to
consumer lending segment loans primarily relate to the
borrowers’ capacity and willingness to repay, customer
payment history and credit scores and consider
macroeconomic factors such as unemployment rates,
consumer bankruptcy filings, household debt levels, real
disposable income, effect of higher interest rates on
variable rate or adjustable rate loans, and in some cases,
updated loan-to-value (“LTV”) information reflecting current
market conditions on secured loans. These and other risk
characteristics are reflected in forecasts of delinquency
levels, bankruptcies and losses which are the primary
factors in determining the allowance for credit losses for the
consumer lending segment.
The Company further disaggregates its loan portfolio
segments into various classes based on their underlying
risk characteristics. The two classes within the commercial
lending segment are commercial loans and commercial
real estate loans. The three classes within the consumer
lending segment are residential mortgages, credit card
loans and other retail loans.
Because business processes and credit risks
associated with unfunded credit commitments are
essentially the same as for loans, the Company utilizes
similar processes to estimate its liability for unfunded credit
commitments. The Company also engages in non-lending
activities that may give rise to credit risk, including
derivative transactions for balance sheet hedging
purposes, foreign exchange transactions, deposit
overdrafts, commodity contracts and interest rate contracts
for customers, investments in securities and other financial
assets, and settlement risk, including Automated Clearing
House transactions and the processing of credit card
transactions for merchants. These activities are subject to
credit review, analysis and approval processes.
During 2024, the Company continued to monitor
economic uncertainty related to interest rates, inflationary
pressures and other economic factors that may affect the
financial strength of corporate and consumer borrowers.
Beginning on January 7, 2025, wildfires generated
substantial damage and disruption to the Los Angeles area.
The Company has programs available to work with
impacted customers and support the community. The
Company continues to monitor the potential impacts on its
customers and financial statements as the situation
evolves. The Company does not anticipate this impact to
be material to its financial statements.
Credit Diversification The Company manages its credit
risk, in part, through diversification of its loan portfolio which
is achieved through limit setting by product type criteria,
such as industry, geography and identification of credit
concentrations. As part of its normal business activities, the
Company offers a broad array of traditional commercial
lending products and specialized products such as asset-
based lending, commercial lease financing, agricultural
credit, warehouse mortgage lending, small business
lending, commercial real estate lending, health care
lending and correspondent banking financing. The
Company also offers an array of consumer lending
products, including residential mortgages, credit card
loans, auto loans, retail leases, home equity loans and
lines, revolving credit arrangements and other consumer
loans. These consumer lending products are primarily
offered through the branch office network, home mortgage
and loan production offices, mobile and online banking,
and indirect distribution channels, such as auto and
recreational vehicle dealers. The Company monitors and
manages the portfolio diversification by industry, customer
and geography. The Company has significant loan
exposure within California given its strategic position in
those markets and size of the economy. Table 6 provides
information with respect to the overall product
diversification and changes in the mix during 2024.
The commercial loan class is diversified among various
industries with higher percentages in financial institutions
and real estate. Table 8 provides a summary of significant
35
industry groups of commercial loans outstanding at
December 31, 2024 and 2023.
The commercial real estate loan class reflects the
Company’s focus on serving business owners within its
local network, as well as regional and national investment-
based real estate owners and developers. Within the
commercial real estate loan class, different property types
have varying degrees of credit risk. Table 9 provides a
summary of the significant property types and geographical
locations of commercial real estate loans outstanding at
December 31, 2024 and 2023. Commercial real estate
loans are diversified among various property types with
higher percentages in multi-family, business owner-
occupied and office properties. The commercial real estate
office sector, which represented 11.5 percent of
commercial real estate loans at December 31, 2024, is a
driver of stress in this loan class. The Company continued
to monitor the commercial real estate office portfolio and
maintained an allowance to loan coverage ratio of 11
percent at December 31, 2024, compared with 10 percent
at December 31, 2023. Office nonperforming loans as a
percent of total office loans increased to 10.9 percent at
December 31, 2024, compared to 7.6 percent at
December 31, 2023.
The Company’s consumer lending segment originates
consumer credit through several channels, including
traditional branch lending, mobile and online banking,
indirect lending, alliance partnerships and correspondent
banks. Each distinct underwriting and origination process
within consumer lending manages unique credit risk
characteristics and prices its loan production
commensurate with the differing risk profiles.
Residential mortgage originations are generally limited
to prime borrowers and are performed through the
Company’s branches, loan production offices, mobile and
online services, and a wholesale network of originators. The
Company may retain residential mortgage loans it
originates on its balance sheet or sell the loans into the
secondary market while retaining the servicing rights and
customer relationships. Utilizing the secondary markets
enables the Company to effectively reduce its credit and
other asset/liability risks. For residential mortgages that are
retained in the Company’s portfolio and for home equity
and second mortgages, credit risk is managed by
adherence to LTV and borrower credit criteria during the
underwriting process.
The Company estimates updated LTV information on its
outstanding residential mortgages quarterly, based on a
method that combines automated valuation model updates
and relevant home price indices. LTV is the ratio of the
loan’s outstanding principal balance to the current estimate
of property value. For home equity and second mortgages,
combined loan-to-value (“CLTV”) is the combination of the
first mortgage original principal balance and the second
lien outstanding principal balance, relative to the current
estimate of property value. Certain loans do not have an
LTV or CLTV, primarily due to lack of availability of relevant
automated valuation model and/or home price indices
values, or lack of necessary valuation data on acquired
loans.
The following tables provide summary information of
residential mortgages and home equity and second
mortgages by LTV at December 31, 2024:
Residential Mortgages
Interest
Percent
(Dollars in Millions)
Only
Amortizing
Total
of Total
Loan-to-Value
Less than or
equal to 80%
$ 13,829 $ 91,554 $ 105,383
88.7 %
Over 80%
through 90%
237
4,907
5,144
4.3
Over 90%
through 100%
25
903
928
.8
Over 100%
22
385
407
.3
No LTV available
—
6
6
—
Loans
purchased
from GNMA
mortgage
pools(a)
—
6,945
6,945
5.9
Total
$ 14,113 $ 104,700 $ 118,813 100.0 %
(a) Represents loans purchased and loans that could be purchased from
Government National Mortgage Association (“GNMA”) mortgage pools under
delinquent loan repurchase options whose payments are primarily insured by the
Federal Housing Administration or guaranteed by the United States Department
of Veterans Affairs.
Home Equity and Second
Mortgages
Percent
(Dollars in Millions)
Lines
Loans
Total
of Total
Loan-to-Value / Combined Loan-to-Value
Less than or equal
to 80%
$ 10,414 $ 2,453 $ 12,867
94.9 %
Over 80% through
90%
419
110
529
3.9
Over 90% through
100%
71
16
87
.6
Over 100%
56
4
60
.4
No LTV/CLTV
available
21
1
22
.2
Total
$ 10,981 $ 2,584 $ 13,565 100.0 %
Credit card and other retail loans are diversified across
customer segments and geographies. Diversification in the
credit card portfolio is achieved with broad customer
relationship distribution through the Company’s and
financial institution partners’ branches, retail and affinity
partners, and digital channels.
Tables 10, 11 and 12 provide a geographical summary
of the residential mortgage, credit card and other retail loan
portfolios, respectively.
The following table provides a summary of the Company’s
credit card loan balances disaggregated based upon
updated credit score at December 31, 2024:
Percent
of Total(a)
Credit score > 660
87 %
Credit score < 660
13
No credit score
—
(a) Credit score distribution excludes loans serviced by others.
36 U.S. Bancorp 2024 Annual Report
TABLE 15 Delinquent Loan Ratios as a Percent of Ending Loan Balances
At December 31
90 days or more past due
2024
2023
Commercial
Commercial
.07 %
.09 %
Lease financing
—
—
Total commercial
.07
.09
Commercial Real Estate
Commercial mortgages
—
—
Construction and development
.09
.03
Total commercial real estate
.02
.01
Residential Mortgages(a)
.17
.12
Credit Card
1.43
1.31
Other Retail
Retail leasing
.05
.05
Home equity and second mortgages
.25
.26
Other
.11
.11
Total other retail
.15
.15
Total loans
.21 %
.19 %
At December 31
90 days or more past due and nonperforming loans
2024
2023
Commercial
.55 %
.37 %
Commercial real estate
1.70
1.46
Residential mortgages(a)
.30
.25
Credit card
1.43
1.31
Other retail
.50
.46
Total loans
.69 %
.57 %
(a) Delinquent loan ratios exclude $2.3 billion and $2.0 billion at December 31, 2024 and 2023, respectively, of loans purchased and loans that could be purchased from GNMA
mortgage pools under delinquent loan repurchase options whose repayments are primarily insured by the Federal Housing Administration or guaranteed by the United States
Department of Veterans Affairs. Including these loans, the ratio of residential mortgages 90 days or more past due and nonperforming to total residential mortgages was 2.28
percent and 2.00 percent at December 31, 2024 and 2023, respectively.
Loan Delinquencies Trends in delinquency ratios are an
indicator, among other considerations, of credit risk within
the Company’s loan portfolios. The entire balance of a loan
account is considered delinquent if the minimum payment
contractually required to be made is not received by the
date specified on the billing statement. Delinquent loans
purchased and loans that could be purchased from GNMA
mortgage pools under delinquent loan repurchase options,
whose repayments are primarily insured by the Federal
Housing Administration or guaranteed by the United States
Department of Veterans Affairs, are excluded from
delinquency statistics. In addition, in certain situations, a
consumer lending customer’s account may be re-aged to
remove it from delinquent status. Generally, the purpose of
re-aging accounts is to assist customers who have recently
overcome temporary financial difficulties and have
demonstrated both the ability and willingness to resume
regular payments. In addition, the Company may re-age the
consumer lending account of a customer who has
experienced longer-term financial difficulties and apply
modified, concessionary terms and conditions to the
account. Commercial lending loans are generally not
subject to re-aging policies.
Accruing loans 90 days or more past due totaled $810
million at December 31, 2024, compared with $698 million
at December 31, 2023. Accruing loans 90 days or more
past due are not included in nonperforming assets and
continue to accrue interest because they are adequately
secured by collateral, are in the process of collection and
are reasonably expected to result in repayment or
restoration to current status, or are managed in
homogeneous portfolios with specified charge-off
timeframes adhering to regulatory guidelines. The ratio of
accruing loans 90 days or more past due to total loans was
0.21 percent at December 31, 2024, compared with 0.19
percent at December 31, 2023.
37
The following table provides summary delinquency
information for residential mortgages, credit card and other
retail loans included in the consumer lending segment:
As a Percent of
Ending
Amount
Loan Balances
At December 31
(Dollars in Millions)
2024
2023
2024
2023
Residential Mortgages(a)
30-89 days
$ 188 $ 169
.16 % .15 %
90 days or more
206
136
.17
.12
Nonperforming
152
158
.13
.14
Total
$ 546 $ 463
.46 % .40 %
Credit Card
30-89 days
$ 428 $ 406 1.41 % 1.42 %
90 days or more
435
375 1.43
1.31
Nonperforming
—
—
—
—
Total
$ 863 $ 781 2.84 % 2.73 %
Other Retail
Retail Leasing
30-89 days
$ 25 $ 25
.62 % .60 %
90 days or more
2
2
.05
.05
Nonperforming
7
8
.17
.19
Total
$ 34 $ 35
.84 % .85 %
Home Equity and Second
Mortgages
30-89 days
$ 61 $ 77
.45 % .59 %
90 days or more
34
34
.25
.26
Nonperforming
121
113
.89
.87
Total
$ 216 $ 224 1.59 % 1.72 %
Other(b)
30-89 days
$ 143 $ 176
.58 % .65 %
90 days or more
28
31
.11
.11
Nonperforming
19
17
.08
.06
Total
$ 190 $ 224
.77 % .82 %
(a) Excludes $660 million of loans 30-89 days past due and $2.3.billion of loans 90
days or more past due at December 31, 2024, purchased and that could be
purchased from GNMA mortgage pools under delinquent loan repurchase
options that continue to accrue interest, compared with $595 million and $2.0
billion at December 31, 2023, respectively.
(b) Includes revolving credit, installment and automobile loans.
Modified Loans In certain circumstances, the Company
may modify the terms of a loan to maximize the collection of
amounts due when a borrower is experiencing financial
difficulties or is expected to experience difficulties in the
near-term. In most cases the modification is either a
concessionary reduction in interest rate, extension of the
maturity date or other concessionary modification of loan
terms that would otherwise not be considered.
Modified loans accrue interest if the borrower complies
with the revised terms and conditions and has
demonstrated repayment performance at a level
commensurate with the modified terms over several
payment cycles, which is generally six months or greater.
The Company continues to work with borrowers who are
experiencing financial difficulties to modify their loans.
Many of the Company’s loan modifications are determined
on a case-by-case basis in connection with ongoing loan
collection processes. The modifications vary within each of
the Company’s loan classes. Commercial lending segment
modifications generally include extensions of the maturity
date and may be accompanied by an increase or decrease
to the interest rate. The Company may also work with the
borrower to make other changes to the loan to mitigate
losses, such as obtaining additional collateral and/or
guarantees to support the loan.
The Company has also implemented certain residential
mortgage loan modification programs. The Company
modifies residential mortgage loans under Federal Housing
Administration, United States Department of Veterans
Affairs, and its own internal programs. Under these
programs, the Company offers qualifying homeowners the
opportunity to permanently modify their loan and achieve
more affordable monthly payments. These modifications
may include adjustments to interest rates, conversion of
adjustable rates to fixed rates, extensions of maturity dates
or deferrals of payments, capitalization of accrued interest
and/or outstanding advances, or in limited situations, partial
forgiveness of loan principal. In some instances,
participation in residential mortgage loan modification
programs requires the customer to complete a short-term
trial period. A permanent loan modification is contingent on
the customer successfully completing the trial period
arrangement, and the loan documents are not modified
until that time.
Credit card and other retail loan modifications are
generally part of distinct modification programs providing
customers modification solutions over a specified time
period, generally up to 60 months.
The Company also makes short-term modifications, in
limited circumstances, to assist borrowers experiencing
temporary hardships. Short-term consumer lending
modification programs include payment reductions,
deferrals of up to three past due payments, and the ability
to return to current status if the borrower makes required
payments. The Company may also make short-term
modifications to commercial lending loans, with the most
common modification being an extension of the maturity
date of three months or less. Such extensions generally are
used when the maturity date is imminent and the borrower
is experiencing some level of financial stress, but the
Company believes the borrower will pay all contractual
amounts owed.
Nonperforming Assets The level of nonperforming assets
represents another indicator of the Company’s risk within
the loan portfolio. Nonperforming assets include nonaccrual
loans, modified loans not performing in accordance with
modified terms and not accruing interest, modified loans
that have not met the performance period required to return
to accrual status, other real estate owned (“OREO”) and
other nonperforming assets owned by the Company.
Interest payments collected from assets on nonaccrual
status are generally applied against the principal balance
and not recorded as income. However, interest income may
38 U.S. Bancorp 2024 Annual Report
be recognized for interest payments received if the
remaining carrying amount of the loan is believed to be
collectible.
At December 31, 2024, total nonperforming assets were
$1.8 billion, compared with $1.5 billion at December 31,
2023. The $338 million (22.6 percent) increase in
nonperforming assets, from December 31, 2023 to
December 31, 2024, was primarily due to higher
nonperforming commercial and commercial real estate
loans. The ratio of total nonperforming assets to total loans
and other real estate was 0.48 percent at December 31,
2024, compared with 0.40 percent at December 31, 2023.
OREO was $21 million at December 31, 2024,
compared with $26 million at December 31, 2023, and was
related to foreclosed properties that previously secured
loan balances. These balances exclude foreclosed GNMA
loans whose repayments are primarily insured by the
Federal Housing Administration or guaranteed by the
United States Department of Veterans Affairs.
39
TABLE 16 Nonperforming Assets(a)
At December 31 (Dollars in Millions)
2024
2023
Commercial
Commercial
$
644
$
349
Lease financing
26
27
Total commercial
670
376
Commercial Real Estate
Commercial mortgages
789
675
Construction and development
35
102
Total commercial real estate
824
777
Residential Mortgages(b)
152
158
Credit Card
—
—
Other Retail
Retail leasing
7
8
Home equity and second mortgages
121
113
Other
19
17
Total other retail
147
138
Total nonperforming loans(1)
1,793
1,449
Other Real Estate(c)
21
26
Other Assets
18
19
Total nonperforming assets
$
1,832
$
1,494
Accruing loans 90 days or more past due(b)
$
810
$
698
Period-end loans(2)
$ 379,832
$ 373,835
Nonperforming assets to total loans(1)/(2)
.47 %
.39 %
Nonperforming assets to total loans plus other real estate(c)
.48 %
.40 %
Changes in Nonperforming Assets
Residential
Commercial and
Mortgages,
Commercial Credit Card and
(Dollars in Millions)
Real Estate
Other Retail
Total
Balance December 31, 2023
$
1,155 $
339 $
1,494
Additions to nonperforming assets
New nonaccrual loans and foreclosed properties
1,557
190
1,747
Advances on loans
32
1
33
Total additions
1,589
191
1,780
Reductions in nonperforming assets
Paydowns, payoffs
(516)
(49)
(565)
Net sales
(41)
(28)
(69)
Return to performing status
(112)
(87)
(199)
Charge-offs(d)
(581)
(28)
(609)
Total reductions
(1,250)
(192)
(1,442)
Net additions to (reductions in) nonperforming assets
339
(1)
338
Balance December 31, 2024
$
1,494 $
338 $
1,832
(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due.
(b) Excludes $2.3 billion and $2.0 billion at December 31, 2024 and 2023, respectively, of loans purchased and loans that could be purchased from GNMA mortgage pools under
delinquent loan repurchase options that are 90 days or more past due that continue to accrue interest, as their repayments are primarily insured by the Federal Housing
Administration or guaranteed by the United States Department of Veterans Affairs.
(c) Foreclosed GNMA loans of $46 million and $47 million at December 31, 2024 and 2023, respectively, continue to accrue interest and are recorded as other assets and excluded
from nonperforming assets because they are insured by the Federal Housing Administration or guaranteed by the United States Department of Veterans Affairs.
(d) Charge-offs exclude actions for certain card products and loan sales that were not classified as nonperforming at the time the charge-off occurred.
40 U.S. Bancorp 2024 Annual Report
TABLE 17 Net Charge-offs as a Percent of Average Loans Outstanding
2024
2023
2022
Average
Average
Average
Loan
Net
Loan
Net
Year Ended December 31
Loan
Net
(Dollars in Millions)
Balance Charge-offs
Percent
Balance Charge-offs
Percent
Balance Charge-offs
Percent
Commercial
Commercial
$ 129,235 $
523
.40 %
Lease financing
4,177
29
.69
Total commercial
133,412
552
.41
Commercial Real Estate
Commercial mortgages
40,513
163
.40
Construction
11,144
2
.02
Total commercial real estate
51,657
165
.32
Residential Mortgages
117,026
(9)
(.01)
Credit Card
28,683
1,227
4.28
Other Retail
Retail leasing
4,097
21
.51
Home equity and second mortgages
13,181
(1)
(.01)
Other
25,819
197
.76
Total other retail
43,097
217
.50
Total loans
$ 373,875 $
2,152
.58 %
Analysis of Loan Net Charge-offs Total loan net charge-
offs were $2.2 billion in 2024, compared with $1.9 billion in
2023. The $247 million (13.0 percent) increase in total net
charge-offs in 2024, compared with 2023, reflected higher
credit card and commercial loan net charge-offs in 2024,
partially offset by the impacts in 2023 of charge-offs on
acquired loans and charge-offs related to balance sheet
repositioning and capital management actions. The ratio of
total loan net charge-offs to average loans outstanding was
0.58 percent in 2024, compared with 0.50 percent in 2023.
Commercial and commercial real estate loan net
charge-offs for 2024 were $717 million (0.39 percent of
average loans outstanding), compared with $577 million
(0.30 percent of average loans outstanding) in 2023. The
increase in net charge-offs in 2024, compared with 2023,
was driven primarily by select borrowers facing challenges
from the higher interest rate and inflation environment.
Residential mortgage loan net charge-offs for 2024
reflected net recoveries of $9 million, compared with net
charge-offs of $109 million (0.09 percent of average loans
outstanding) in 2023. Credit card loan net charge-offs in
2024 were $1.2 billion (4.28 percent of average loans
outstanding), compared with $849 million (3.20 percent of
average loans outstanding) in 2023. Other retail loan net
charge-offs for 2024 were $217 million (0.50 percent of
average loans outstanding), compared with $370 million
(0.75 percent of average loans outstanding) in 2023. The
decrease in residential mortgage and other retail loan net
charge-offs in 2024, compared with 2023, reflects 2023
charge-offs related to balance sheet repositioning and
capital management actions. The increase in credit card
net charge-offs reflects stabilizing economic and credit
conditions.
$ 130,544 $
293
.22 % $ 118,967 $
211
.18 %
4,339
21
.48
4,830
16
.33
134,883
314
.23
123,797
227
.18
42,894
265
.62
30,890
17
.06
11,752
(2)
(.02)
10,208
20
.20
54,646
263
.48
41,098
37
.09
115,922
109
.09
84,749
(23)
(.03)
26,570
849
3.20
23,478
524
2.23
4,665
6
.13
6,459
3
.05
12,829
(2)
(.02)
11,051
(7)
(.06)
31,760
366
1.15
42,941
302
.70
49,254
370
.75
60,451
298
.49
$ 381,275 $
1,905
.50 % $ 333,573 $
1,063
.32 %
Analysis and Determination of the Allowance for Credit
Losses The allowance for credit losses is established for
current expected credit losses on the Company’s loan and
lease portfolio, including unfunded credit commitments.
The allowance considers expected losses for the remaining
lives of the applicable assets, inclusive of expected
recoveries. The allowance for credit losses is increased
through provisions charged to earnings and reduced by net
charge-offs.
Management evaluates the appropriateness of the
allowance for credit losses on a quarterly basis. Multiple
economic scenarios are considered over a three-year
reasonable and supportable forecast period, which
includes increasing consideration of historical loss
experience over years two and three. These economic
scenarios are constructed with interrelated projections of
multiple economic variables, and loss estimates are
produced that consider the historical correlation of those
economic variables with credit losses. After the forecast
period, the Company fully reverts to long-term historical
loss experience, adjusted for prepayments and
characteristics of the current loan and lease portfolio, to
estimate losses over the remaining life of the portfolio. The
economic scenarios are updated at least quarterly and are
designed to provide a range of reasonable estimates, both
better and worse than current expectations. Scenarios are
weighted based on the Company’s expectation of
economic conditions for the foreseeable future and reflect
significant judgment and consideration of economic
forecast uncertainty. Final loss estimates also consider
factors affecting credit losses not reflected in the scenarios,
due to the unique aspects of current conditions and
expectations. These factors may include, but are not limited
41
to, changes in borrower behavior or conditions in specific
lending segments, loan servicing practices, regulatory
guidance, and/or fiscal and monetary policy actions.
Because business processes and credit risks
associated with unfunded credit commitments are
essentially the same as for loans, the Company utilizes
similar processes to estimate its liability for unfunded credit
commitments, which is included in other liabilities in the
Consolidated Balance Sheet. Both the allowance for loan
losses and the liability for unfunded credit commitments are
included in the Company’s analysis of credit losses and
reported reserve ratios.
The allowance recorded for credit losses utilizes
forward-looking expected loss models to consider a variety
of factors affecting lifetime credit losses. These factors
include, but are not limited to, macroeconomic variables
such as unemployment rates, real estate prices, gross
domestic product levels, interest rates, and corporate bond
spreads, as well as loan and borrower characteristics, such
as internal risk ratings on commercial loans and consumer
credit scores, delinquency status, collateral type and
available valuation information, consideration of end-of-term
losses on lease residuals, and the remaining term of the
loan, adjusted for expected prepayments. For each loan
portfolio, including those loans modified under various loan
modification programs, model estimates are adjusted as
necessary to consider any relevant changes in portfolio
composition, lending policies, underwriting standards, risk
management practices, economic conditions or other
factors that may affect the accuracy of the model. Expected
credit loss estimates also include consideration of
expected cash recoveries on loans previously charged-off
or expected recoveries on collateral-dependent loans
where recovery is expected through sale of the collateral at
fair value less selling costs. Where loans do not exhibit
similar risk characteristics, an individual analysis is
performed to consider expected credit losses.
For loans and leases that do not share similar risk
characteristics with a pool of loans, the Company
establishes individually assessed reserves. Reserves for
individual commercial nonperforming loans greater than $5
million in the commercial lending segment are analyzed
utilizing expected cash flows discounted using the original
effective interest rate, the observable market price of the
loan, or the fair value of the collateral, less selling costs, for
collateral-dependent loans as appropriate.
When evaluating the appropriateness of the allowance
for credit losses for any loans and lines in a junior lien
position, the Company considers the delinquency and
modification status of the first lien, based on either
servicing data for the first lien accounts serviced by the
Company or the status of first lien mortgage accounts
reported on customer credit bureau files when the first lien
is not serviced by the Company. This information is
considered within the overall assessment of economic
conditions, problem loans, recent loss experience and
other factors in determining the allowance for credit losses.
When a loan portfolio is purchased, the acquired loans
are divided into those considered purchased with more
than insignificant credit deterioration (“PCD”) and those not
considered PCD. An allowance is established for each
population and considers product mix, risk characteristics
of the portfolio and delinquency status and refreshed LTV
ratios when possible. Considerations for PCD loans include
whether the loan has experienced a charge-off, bankruptcy
or significant deterioration since origination. The allowance
established for purchased loans not considered PCD is
recognized through provision expense upon acquisition,
whereas the allowance established for loans considered
PCD at acquisition is offset by an increase in the basis of
the acquired loans. Any subsequent increases and
decreases in the allowance related to purchased loans,
regardless of PCD status, are recognized through provision
expense, with charge-offs charged to the allowance. The
Company had a total net book balance of $2.3 billion of
PCD loans, primarily related to the MUB acquisition,
included in its loan portfolio at December 31, 2024.
The Company’s methodology for determining the
appropriate allowance for credit losses also considers the
imprecision inherent in the methodologies used and
allocated to the various loan portfolios. As a result, amounts
determined under the methodologies described above are
adjusted by management to consider the potential impact
of other qualitative factors not captured in quantitative
model adjustments which include, but are not limited to, the
following: model imprecision, imprecision in economic
scenario assumptions, and emerging risks related to either
changes in the economic environment that are affecting
specific portfolios, or changes in portfolio concentrations
over time that may affect model performance. The
consideration of these items results in adjustments to
allowance amounts included in the Company’s allowance
for credit losses for each loan portfolio. Some factors
considered in 2024 that required a higher level of
qualitative judgment included consideration of factors
affecting commercial real estate office property values, and
the effects of persisting inflationary pressures and
continued elevated interest rates across commercial and
consumer lending portfolios.
The results of the analysis are evaluated quarterly to
confirm the estimates are appropriate for each loan
portfolio. Table 19 shows the amount of the allowance for
credit losses by loan class and underlying portfolio
category.
Although the Company determined the amount of each
element of the allowance separately and considers this
process to be an important credit management tool, the
entire allowance for credit losses is available for the entire
loan portfolio. The actual amount of losses can vary
significantly from the estimated amounts.
At December 31, 2024, the allowance for credit losses
was $7.9 billion, compared with an allowance of $7.8 billion
at December 31, 2023. The increase in the allowance for
credit losses of $86 million (1.1 percent) at December 31,
2024, compared with December 31, 2023, was primarily
driven by loan portfolio growth.
The ratio of the allowance for credit losses to period-end
loans was 2.09 percent at December 31, 2024, compared
with 2.10 percent at December 31, 2023. The ratio of the
allowance for credit losses to nonperforming loans was 442
42 U.S. Bancorp 2024 Annual Report
percent at December 31, 2024, compared with 541 percent
at December 31, 2023. The ratio of the allowance for credit
losses to annual loan net charge-offs at December 31,
2024, was 368 percent, compared with 411 percent at
December 31, 2023.
The allowance for credit losses related to commercial
lending segment loans decreased $56 million during the
year ended December 31, 2024, reflecting improved credit
quality and charge-offs of problem loans, partially offset by
loan growth.
The allowance for credit losses related to consumer
lending segment loans increased $142 million during the
year ended December 31, 2024, due to credit card portfolio
growth and stabilizing performance, partially offset by
favorability in residential real estate secured portfolios
related to strength in home values.
Economic conditions considered in estimating the
allowance for credit losses at December 31, 2024 included
changes in projected gross domestic product and
unemployment levels. These factors were evaluated
through a combination of quantitative calculations using
multiple economic scenarios and additional qualitative
assessments that considered the degree of economic
uncertainty in the current environment. The projected
unemployment rates for 2025 considered in the estimate
ranged from 3.1 percent to 8.8 percent.
The following table summarizes the baseline forecast for
key economic variables the Company used in its estimate
of the allowance for credit losses at December 31, 2024
and 2023:
December 31,
December 31,
2024
2023
United States unemployment rate
for the three months ending(a)
December 31, 2024
4.2 %
4.0 %
June 30, 2025
4.4
4.1
December 31, 2025
4.3
4.0
United States real gross domestic
product for the three months
ending(b)
December 31, 2024
2.3 %
1.3 %
June 30, 2025
1.9
1.6
December 31, 2025
1.7
2.0
(a) Reflects quarterly average of forecasted reported United States unemployment
rate.
(b) Reflects year-over-year growth rates.
43
TABLE 18 Summary of Allowance for Credit Losses
(Dollars in Millions)
2024
2023
2022
Balance at beginning of year
$
7,839
$
7,404
$
6,155
Change in accounting principle(a)
—
(62)
—
Allowance for acquired credit losses(b)
—
127
336
Charge-Offs
Commercial
Commercial
615
357
294
Lease financing
37
32
25
Total commercial
652
389
319
Commercial real estate
Commercial mortgages
218
278
28
Construction and development
11
3
26
Total commercial real estate
229
281
54
Residential mortgages
13
129
13
Credit card
1,406
1,014
696
Other retail
Retail leasing
35
18
18
Home equity and second mortgages
9
12
9
Other
269
448
391
Total other retail
313
478
418
Total charge-offs(c)
2,613
2,291
1,500
Recoveries
Commercial
Commercial
92
64
83
Lease financing
8
11
9
Total commercial
100
75
92
Commercial real estate
Commercial mortgages
55
13
11
Construction and development
9
5
6
Total commercial real estate
64
18
17
Residential mortgages
22
20
36
Credit card
179
165
172
Other retail
Retail leasing
14
12
15
Home equity and second mortgages
10
14
16
Other
72
82
89
Total other retail
96
108
120
Total recoveries
461
386
437
Net Charge-Offs
Commercial
Commercial
523
293
211
Lease financing
29
21
16
Total commercial
552
314
227
Commercial real estate
Commercial mortgages
163
265
17
Construction and development
2
(2)
20
Total commercial real estate
165
263
37
Residential mortgages
(9)
109
(23)
Credit card
1,227
849
524
Other retail
Retail leasing
21
6
3
Home equity and second mortgages
(1)
(2)
(7)
Other
197
366
302
Total other retail
217
370
298
Total net charge-offs
2,152
1,905
1,063
Provision for credit losses(d)
2,238
2,275
1,977
Other changes
—
—
(1)
Balance at end of year
$
7,925
$
7,839
$
7,404
Components
Allowance for loan losses
$
7,583
$
7,379
$
6,936
Liability for unfunded credit commitments
342
460
468
Total allowance for credit losses(1)
$
7,925
$
7,839
$
7,404
Period-end loans(2)
$ 379,832
$ 373,835
$ 388,213
Nonperforming loans(3)
1,793
1,449
972
Allowance for Credit Losses as a Percentage of
Period-end loans(1)/(2)
2.09 %
2.10 %
1.91 %
Nonperforming loans(1)/(3)
442
541
762
Nonperforming and accruing loans 90 days or more past due
304
365
506
Nonperforming assets
433
525
729
Net charge-offs
368
411
697
(a) Effective January 1, 2023, the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings.
(b) Allowance for purchased credit deteriorated and charged-off loans acquired from MUB.
(c) 2023 includes $91 million of charge-offs related to uncollectible amounts on acquired loans, as well as $309 million of charge-offs related to balance sheet repositioning and capital
management actions. 2022 includes $179 million of charge-offs related to uncollectible amounts on acquired loans, as well as $189 million of charge-offs related to balance sheet
repositioning and capital management actions.
(d) 2023 includes provision for credit losses of $243 million related to balance sheet repositioning and capital management actions. 2022 includes provision for credit losses of $662
million related to the acquisition of MUB and $129 million related to balance sheet repositioning and capital management actions.
44 U.S. Bancorp 2024 Annual Report
TABLE 19 Allocation of the Allowance for Credit Losses
Allowance as a Percent of
Allowance Amount
Loans
At December 31 (Dollars in Millions)
2024
2023
2024
2023
Commercial
Commercial
$
2,090 $
2,038
1.55 %
1.60 %
Lease financing
85
81
2.01
1.91
Total commercial
2,175
2,119
1.56
1.61
Commercial Real Estate
Commercial mortgages
1,016
1,068
2.63
2.55
Construction and development
492
552
4.80
4.79
Total commercial real estate
1,508
1,620
3.09
3.03
Residential Mortgages
783
827
.66
.72
Credit Card
2,640
2,403
8.70
8.41
Other Retail
Retail leasing
93
95
2.30
2.30
Home equity and second mortgages
255
321
1.88
2.46
Other
471
454
1.91
1.67
Total other retail
819
870
1.93
1.96
Total allowance
$
7,925 $
7,839
2.09 %
2.10 %
Residual Value Risk Management The Company
manages its risk to changes in the residual value of leased
vehicles, office and business equipment, and other assets
through disciplined residual valuation at the inception of a
lease, diversification of its leased assets, regular residual
asset valuation reviews and monitoring of residual value
gains or losses upon the disposition of assets. Lease
originations are subject to the same well-defined
underwriting standards referred to in the “Credit Risk
Management” section, which includes an evaluation of the
residual value risk. Retail lease residual value risk is
mitigated further by effective end-of-term marketing of off-
lease vehicles.
Included in the retail leasing portfolio was approximately
$3.1 billion of retail leasing residuals at December 31,
2024, compared with $3.4 billion at December 31, 2023.
The Company monitors concentrations of leases by
manufacturer and vehicle type. As of December 31, 2024,
vehicle lease residuals related to sport utility vehicles were
54.1 percent of the portfolio, while auto and truck classes
represented approximately 21.2 percent and 14.6 percent
of the portfolio, respectively. At year-end 2024, the
individual vehicle model with the largest residual value
outstanding represented 23.7 percent of the aggregate
residual value of all vehicles in the portfolio. At
December 31, 2024 and 2023, the weighted-average
origination term of the portfolio was 41 months. At
December 31, 2024, the commercial leasing portfolio had
$484 million of residuals, compared with $491 million at
December 31, 2023. At year-end 2024, lease residuals
related to trucks and other transportation equipment
represented 39.4 percent of the total residual portfolio,
while business and office equipment represented 27.4
percent.
Operational Risk Management The Company operates in
many different businesses in diverse markets and relies on
the ability of its employees and systems to process a high
number of transactions. Operational risk is inherent in all
business activities, and the management of this risk is
important to the achievement of the Company’s objectives.
Business lines have direct and primary responsibility and
accountability for identifying, controlling, and monitoring
operational risks embedded in their business activities,
including those additional or increased risks created by
economic and financial disruptions.
The Company maintains a system of controls with the
objective of providing proper transaction authorization and
execution, proper system operations, proper oversight of
third parties with whom it does business, safeguarding of
assets from misuse or theft, and ensuring the reliability and
security of financial and other data. The Company also
maintains a cybersecurity risk program which provides
centralized planning and management of related and
interdependent work with a focus on risks from
cybersecurity threats. The Company's cybersecurity risk
program is integrated into the Company's overall business
and operational strategies and requires that the Company
allocate appropriate resources to maintain the program.
Refer to “Item 1C. Cybersecurity” in the Company’s Annual
Report on Form 10-K for the year ended December 31,
2024, for further discussion on the Company's
cybersecurity risk program.
Business continuation and disaster recovery planning is
also critical to effectively managing operational risks. Each
business unit of the Company is required to develop,
maintain and test these plans at least annually to ensure
that recovery activities, if needed, can support mission
critical functions, including technology, networks and data
45
centers supporting customer applications and business
operations.
While the Company strives to design processes to
minimize operational risks, there is no absolute assurance
that business disruption or operational losses would not
occur from an external event or internal control breakdown.
On an ongoing basis, management makes process
changes and investments to enhance its systems of internal
controls and business continuity and disaster recovery
plans.
Compliance Risk Management The Company may suffer
legal or regulatory sanctions, material financial loss, or
damage to its reputation if it fails to comply with laws,
regulations, rules, standards of good practice, and codes
of conduct, including those related to compliance with
Bank Secrecy Act/anti-money laundering requirements,
sanctions compliance requirements as administered by the
Office of Foreign Assets Control, consumer protection and
other requirements. The Company has controls and
processes in place for the assessment, identification,
monitoring, management and reporting of compliance risks
and issues, including those created or increased by
economic and financial disruptions. Refer to “Supervision
and Regulation” in the Company’s Annual Report on Form
10-K for the year ended December 31, 2024, for further
discussion of the regulatory framework applicable to bank
holding companies and their subsidiaries.
Interest Rate Risk Management In the banking industry,
changes in interest rates are a significant risk that can
impact earnings as well as the safety and soundness of an
entity. The Company manages its exposure to changes in
interest rates through asset and liability management
activities within guidelines established by its Asset Liability
Management Committee (“ALCO”) and approved by the
Board of Directors. The ALCO has the responsibility for
approving and overseeing compliance with the ALCO
management policies, including interest rate risk exposure.
One way the Company measures and analyzes its interest
rate risk is through analysis of net interest income
sensitivities across a range of scenarios.
Net interest income sensitivity analysis includes
evaluating all of the Company’s assets and liabilities and
off-balance sheet instruments, inclusive of new business
activity, under various interest rate scenarios that differ in
the direction, amount and speed of change over time, as
well as the overall shape of the yield curve. The balance
sheet includes assumptions regarding loan and deposit
volumes and pricing which are based on quantitative
analysis, historical trends and management outlook and
strategies. Deposit balances, mix and pricing are dynamic
TABLE 20 Sensitivity of Net Interest Income
December 31, 2024
across interest rate scenarios and will change both with the
absolute level of rates as well as the assumed interest rate
shock. Deposit pricing changes, commonly referred to as
the deposit beta, represents the amount by which the
Company’s interest-bearing deposit rates have or will
change given a change in short-term market rates. Base
case and net interest income sensitivities are reviewed
monthly by the ALCO and are used to guide asset/liability
management strategies.
The Company also manages interest rate sensitivity by
utilizing market value of equity modeling, which measures
the degree to which the market values of the Company’s
assets and liabilities and off-balance sheet instruments will
change given a change in interest rates. Management
measures the impact of changes in market values due to
interest rates under a number of scenarios, including
immediate and sustained parallel shifts, and flattening or
steepening of the yield curve. The Company manages its
interest rate risk position by holding assets with desired
interest rate risk characteristics on its balance sheet,
executing certain pricing strategies for loans and deposits
and deploying investment portfolio, funding and derivative
strategies.
Table 20 summarizes the projected impact to net
interest income over the next 12 months of various potential
interest rate changes. The sensitivity of the projected
impact to net interest income over the next 12 months is
dependent on balance sheet growth, product mix,
customer behavior, deposit pricing and funding decisions.
From December 31, 2023 to December 31, 2024, interest
rate sensitivity to higher rates decreased, primarily due to
deposit migration into higher yielding products. As of
December 31, 2024, the Company continues to be asset
sensitive to a parallel upward move in interest rates with
most of that impact coming from the long end of the yield
curve. Net interest income simulation incorporates rate-
sensitive deposit behavior that could result in changes in
both projected deposit balances and mix under the various
interest rate scenarios. Higher rate scenarios result in
disintermediation of bank deposits and a mix shift into
higher yielding deposits. Conversely, in lower rate
scenarios, the analysis assumes that deposits will shift into
lower yielding products. While the Company utilizes models
and assumptions based on historical information and
expected behaviors, actual outcomes could vary
significantly. For larger interest rate shock scenarios,
mortgage assets and deposits are expected to behave in a
non-linear manner resulting in varying impacts to net
interest income in those scenarios.
December 31, 2023
Down 50 bps
Up 50 bps Down 200 bps
Up 200 bps Down 50 bps
Up 50 bps Down 200 bps
Up 200 bps
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Net interest income
.25 %
.17 %
.01 %
1.05 %
(.19)%
.71 %
(1.05)%
2.28 %
46 U.S. Bancorp 2024 Annual Report
Use of Derivatives to Manage Interest Rate and Other
Risks To manage the sensitivity of earnings and capital to
interest rate, prepayment, credit, price and foreign
currency fluctuations (asset and liability management
positions), the Company enters into derivative transactions.
The Company uses derivatives for asset and liability
management purposes primarily in the following ways:
• To convert fixed-rate debt and available-for-sale
investment securities from fixed-rate payments to
floating-rate payments;
• To convert floating-rate loans and debt from floating-rate
payments to fixed-rate payments;
• To mitigate changes in value of the Company’s unfunded
mortgage loan commitments, funded MLHFS and MSRs;
• To mitigate remeasurement volatility of foreign currency
denominated balances; and
• To mitigate the volatility of the Company’s net investment
in foreign operations driven by fluctuations in foreign
currency exchange rates.
In addition, the Company enters into interest rate,
foreign exchange and commodity derivative contracts to
support the business requirements of its customers
(customer-related positions). The Company minimizes the
market, funding and liquidity risks of customer-related
positions by either entering into similar offsetting positions
with broker-dealers, or on a portfolio basis by entering into
other derivative or non-derivative financial instruments that
partially or fully offset the exposure from these customer-
related positions. The Company may enter into derivative
contracts that are either exchange-traded, centrally cleared
through clearinghouses or over-the-counter. The Company
does not utilize derivatives for speculative purposes. The
Company does not designate all of the derivatives that it
enters into for risk management purposes as accounting
hedges because of the inefficiency of applying the
accounting requirements and may instead elect fair value
accounting for the related hedged items. In particular, the
Company enters into interest rate swaps, swaptions,
forward commitments to buy to-be-announced securities
(“TBAs”), U.S. Treasury and Eurodollar futures and options
on U.S. Treasury futures to mitigate fluctuations in the value
of its MSRs, but does not designate those derivatives as
accounting hedges. Refer to Note 9 of the Notes to
Consolidated Financial Statements for additional
information regarding MSRs, including management of the
changes in fair value.
Additionally, the Company uses forward commitments to
sell TBAs and other commitments to sell residential
mortgage loans at specified prices to economically hedge
the interest rate risk in its residential mortgage loan
production activities. The forward commitments to sell and
the unfunded mortgage loan commitments on loans
intended to be sold are considered derivatives under the
accounting guidance related to accounting for derivative
instruments and hedging activities. The Company has
elected the fair value option for the MLHFS.
Derivatives are subject to credit risk associated with
counterparties to the contracts. Credit risk associated with
derivatives is measured by the Company based on the
probability of counterparty default. The Company manages
the credit risk of its derivative positions by diversifying its
positions among various counterparties, by entering into
master netting arrangements, and, where possible, by
requiring collateral arrangements. The Company may also
transfer counterparty credit risk related to interest rate
swaps to third parties through the use of risk participation
agreements. In addition, certain interest rate swaps,
interest rate forwards and credit contracts are required to
be centrally cleared through clearinghouses to further
mitigate counterparty credit risk. The Company also
mitigates the credit risk of its derivative positions, as well as
the credit risk on loans or lending portfolios, through the
use of credit contracts.
For additional information on derivatives and hedging
activities, refer to Notes 19 and 20 in the Notes to
Consolidated Financial Statements.
Market Risk Management In addition to interest rate risk,
the Company is exposed to other forms of market risk,
principally related to trading activities which support
customers’ strategies to manage their own foreign
currency, interest rate risk, commodities risk and funding
activities. For purposes of its internal capital adequacy
assessment process, the Company considers risk arising
from its trading activities, as well as the remeasurement
volatility of foreign currency denominated balances
included on its Consolidated Balance Sheet (collectively,
“Covered Positions”), employing methodologies consistent
with the requirements of regulatory rules for market risk.
The Company’s Market Risk Committee (“MRC”), within the
framework of the ALCO, oversees market risk management.
The MRC monitors and reviews the Company’s Covered
Positions and establishes policies for market risk
management, including exposure limits for each portfolio.
The Company uses a VaR approach to measure general
market risk. Theoretically, VaR represents the statistical risk
of loss the Company has to adverse market movements
over a one-day time horizon. The Company uses the
historical simulation method to calculate VaR for its
Covered Positions measured at the ninety-ninth percentile
using a one-year look-back period for distributions derived
from past market data. The market factors used in the
calculations include those pertinent to market risks inherent
in the underlying trading portfolios, principally those that
affect the Company’s corporate bond trading business,
foreign currency transaction business, client derivatives
business, loan trading business and municipal securities
business, as well as those inherent in the Company’s
foreign denominated balances and the derivatives used to
mitigate the related measurement volatility. On average, the
Company expects the one-day VaR to be exceeded by
actual losses two to three times per year related to these
positions. The Company monitors the accuracy of internal
VaR models and modeling processes by back-testing
model performance, regularly updating the historical data
used by the VaR models and regular model validations to
assess the accuracy of the models’ input, processing, and
reporting components. All models are required to be
independently reviewed and approved prior to being
placed in use. If the Company were to experience market
47
losses in excess of the estimated VaR more often than
expected, the VaR models and associated assumptions
would be analyzed and adjusted.
The average, high, low and period-end one-day VaR
amounts for the Company’s Covered Positions were as
follows:
Year Ended December 31
(Dollars in Millions)
2024
2023
Average
$
3 $
4
High
4
7
Low
2
2
Period-end
2
3
The Company did not experience any actual losses for
its combined Covered Positions that exceeded VaR during
the years ended December 31, 2024 and 2023. The
Company stress tests its market risk measurements to
provide management with perspectives on market events
that may not be captured by its VaR models, including
worst case historical market movement combinations that
have not necessarily occurred on the same date.
The Company calculates Stressed VaR using the same
underlying methodology and model as VaR, except that a
historical continuous one-year look-back period is utilized
that reflects a period of significant financial stress
appropriate to the Company’s Covered Positions. The
period selected by the Company includes the significant
market volatility of the last four months of 2008.
The average, high, low and period-end one-day Stressed
VaR amounts for the Company’s Covered Positions were as
follows:
Year Ended December 31
(Dollars in Millions)
2024
2023
Average
$
10 $
10
High
16
16
Low
7
6
Period-end
11
8
Valuations of positions in client derivatives and foreign
currency activities are based on discounted cash flow or
other valuation techniques using market-based
assumptions. These valuations are compared to third-party
quotes or other market prices to determine if there are
significant variances. Significant variances are approved by
senior management in the Company’s corporate functions.
Valuation of positions in the corporate bond trading, loan
trading, asset-backed securities and municipal securities
businesses are based on trader marks. These trader marks
are evaluated against third-party prices, with significant
variances approved by senior management in the
Company’s corporate functions.
The Company also measures the market risk of its
hedging activities related to residential MLHFS and MSRs
using the historical simulation method. The VaRs are
measured at the ninety-ninth percentile and employ factors
pertinent to the market risks inherent in the valuation of the
assets and hedges. A one-year look-back period is used to
obtain past market data for the models.
The average, high and low VaR amounts for the residential
MLHFS and related hedges and the MSRs and related
hedges were as follows:
Year Ended December 31
(Dollars in Millions)
2024
2023
Residential Mortgage Loans Held For
Sale and Related Hedges
Average
$
2 $
1
High
3
2
Low
1
—
Mortgage Servicing Rights and Related
Hedges
Average
$
2 $
7
High
3
12
Low
1
2
Liquidity Risk Management The Company’s liquidity risk
management process is designed to identify, measure, and
manage the Company’s funding and liquidity risk to meet
its daily funding needs and to address expected and
unexpected changes in its funding requirements. The
Company engages in various activities to manage its
liquidity risk. These activities include diversifying its funding
sources, stress testing, and holding readily-marketable
assets which can be used as a source of liquidity if
needed. In addition, the Company’s profitable operations,
sound credit quality and strong credit ratings and capital
position have enabled it to develop a large and reliable
base of core deposit funding within its market areas and in
domestic and global capital markets.
The Company’s Board of Directors approves the
Company’s liquidity policy. The Risk Management
Committee of the Company’s Board of Directors oversees
the Company’s liquidity risk management process and
approves a contingency funding plan. The ALCO reviews
the Company’s liquidity policy and limits, and regularly
assesses the Company’s ability to meet funding
requirements arising from adverse company-specific or
market events.
The Company’s liquidity policy requires it to maintain
diversified wholesale funding sources to avoid maturity,
entity and market concentrations. The Company operates a
Cayman Islands branch for issuing Eurodollar time
deposits. In addition, the Company has relationships with
dealers to issue national market retail and institutional
savings certificates and short-term and medium-term notes.
The Company also maintains a significant correspondent
banking network and relationships. Accordingly, the
Company has access to national federal funds, funding
through repurchase agreements and sources of stable
certificates of deposit and commercial paper.
The Company regularly projects its funding needs under
various stress scenarios and maintains a contingency
funding plan consistent with the Company’s access to
diversified sources of contingent funding. The Company
maintains a substantial level of total available liquidity in the
48 U.S. Bancorp 2024 Annual Report
form of on-balance sheet and off-balance sheet funding
sources. These liquidity sources include cash at the
Federal Reserve Bank and certain European central banks,
unencumbered liquid assets, and capacity to borrow from
the FHLB and at the Federal Reserve Bank’s Discount
Window. Unencumbered liquid assets in the Company’s
investment securities portfolio provide asset liquidity
through the Company’s ability to sell the securities or
pledge and borrow against them. Refer to Note 4 of the
Notes to Consolidated Financial Statements and “Balance
Sheet Analysis” for further information on investment
securities maturities and trends. Asset liquidity is further
enhanced by the Company’s practice of pledging loans to
access secured borrowing facilities through the FHLB and
Federal Reserve Bank.
The following table summarizes the Company's total
available liquidity from on-balance sheet and off-balance
sheet funding sources:
December 31, December 31,
(Dollars in Millions)
2024
2023
Cash held at the Federal Reserve
Bank and other central banks
$
47,434 $
52,403
Available investment securities
67,910
34,220
Borrowing capacity from the
Federal Reserve Bank and FHLB
171,226
215,763
Total available liquidity
$ 286,570 $ 302,386
Borrowing capacity from the Federal Reserve Bank and
FHLB declined from December 31, 2023 to December 31,
2024 primarily due to the expiration of the Federal Reserve
Bank’s Bank Term Funding Program (“BTFP”). This decline
was partially offset by an increase in available investment
securities as a portion of the securities previously pledged
through the BTFP were made available for sale or pledging.
The Company’s diversified deposit base provides a
sizeable source of relatively stable and low-cost funding,
while reducing the Company’s reliance on the wholesale
markets. Total deposits were $518.3 billion at
December 31, 2024, compared with $512.3 billion at
December 31, 2023. Average noninterest-bearing deposit
balances in 2024 decreased 23 percent compared with
2023, reflecting the shift of noninterest-bearing balances
into interest-bearing deposit products resulting from the
higher interest rate environment. Average total deposits in
2024 and 2023 funded approximately 77 percent and 76
percent of the Company’s total assets for these same
periods, respectively. Refer to Note 11 of the Notes to
Consolidated Financial Statements and “Balance Sheet
Analysis” for further information on the maturities, terms and
trends of the Company’s deposits.
Additional funding is provided by long-term debt and
short-term borrowings. Long-term debt was $58.0 billion at
December 31, 2024, and is an important funding source
because of its multi-year borrowing structure. Refer to Note
13 of the Notes to Consolidated Financial Statements for
information on the terms and maturities of the Company’s
long-term debt issuances and “Balance Sheet Analysis” for
discussion on long-term debt trends. Short-term borrowings
were $15.5 billion at December 31, 2024, and supplement
the Company’s other funding sources. Refer to Note 12 of
the Notes to Consolidated Financial Statements and
“Balance Sheet Analysis” for further information on the
terms and trends of the Company’s short-term borrowings.
The Company’s ability to raise negotiated funding at
competitive prices is influenced by rating agencies’ views
of the Company’s credit quality, liquidity, capital and
earnings. Table 21 details the rating agencies’ most recent
assessments as of December 31, 2024.
49
TABLE 21 Credit Ratings
Moody's
S&P Global Ratings
Fitch Ratings
DBRS Morningstar
U.S. Bancorp
Long-term issuer rating
A3
A
A+
AA (low)
Short-term issuer rating
N/A
A-1
F1
R-1 (middle)
Senior unsecured debt
A3
A
A
AA (low)
Subordinated debt
A3
A-
A-
A (high)
Junior subordinated debt
Baa1
N/A
N/A
N/A
Preferred stock
Baa2
BBB
BBB
A (low)
Commercial paper
P-2
N/A
F1
R-1 (middle)
U.S. Bank National Association
Long-term issuer rating
A2
A+
A+
AA
Short-term issuer rating
P-1
A-1
F1
R-1 (high)
Long-term deposits
Aa3
N/A
AA-
AA
Short-term deposits
P-1
N/A
F1+
N/A
Senior unsecured debt
A2
A+
A+
AA
Subordinated debt
A2
A
N/A
AA (low)
Commercial paper
P-1
A-1
N/A
R-1 (high)
Counterparty risk assessment
A1(cr)/P-1(cr)
Counterparty risk rating
A2/P-1
Baseline credit assessment
a2
In addition to assessing liquidity risk on a consolidated
basis, the Company monitors the parent company’s
liquidity. The parent company’s routine funding
requirements consist primarily of operating expenses,
dividends paid to shareholders, debt service, repurchases
of common stock and funds used for acquisitions. The
parent company obtains funding to meet its obligations
from dividends collected from its subsidiaries and the
issuance of debt and capital securities. The Company
establishes limits for the minimal number of months into the
future where the parent company can meet existing and
forecasted obligations with cash and securities held that
can be readily monetized. The Company measures and
manages this limit in both normal and adverse conditions.
The Company maintains sufficient funding to meet
expected capital and debt service obligations for 24
months without the support of dividends from subsidiaries
and assuming access to the wholesale markets is
maintained. The Company maintains sufficient liquidity to
meet its capital and debt service obligations for 12 months
under adverse conditions without the support of dividends
from subsidiaries or access to the wholesale markets. The
parent company is currently in excess of required liquidity
minimums.
Under SEC rules, the parent company is classified as a
“well-known seasoned issuer,” which allows it to file a
registration statement that does not have a limit on
issuance capacity. “Well-known seasoned issuers”
generally include those companies with outstanding
common securities with a market value of at least
$700 million held by non-affiliated parties or those
companies that have issued at least $1 billion in aggregate
principal amount of non-convertible securities, other than
common equity, in the last three years. However, the parent
company’s ability to issue debt and other securities under a
registration statement filed with the SEC under these rules
is limited by the debt issuance authority granted by the
Company’s Board of Directors and/or the ALCO policy.
At December 31, 2024, parent company long-term debt
outstanding was $35.3 billion, compared with $34.3 billion
at December 31, 2023. The increase was primarily due to
$6.5 billion of medium-term note issuances, partially offset
by $4.6 billion of medium-term note and $1.0 billion of
subordinated note repayments. As of December 31, 2024,
there was $2.3 billion of parent company debt scheduled to
mature in 2025. Future debt maturities may be met through
medium-term note and capital security issuances and
dividends from subsidiaries, as well as from parent
company cash and cash equivalents.
Dividend payments to the Company by its subsidiary
banks are subject to regulatory review and statutory
limitations and, in some instances, regulatory approval. In
general, dividends to the parent company from its banking
subsidiaries are limited by rules which compare dividends
to net income for regulatorily-defined periods. For further
information, see Note 24 of the Notes to Consolidated
Financial Statements.
The Company is subject to a regulatory Liquidity
Coverage Ratio (“LCR”) requirement which requires large
banking organizations to maintain an adequate level of
unencumbered high quality liquid assets to meet estimated
liquidity needs over a 30-day stressed period. For the three
months ended December 31, 2024 and December 31,
50 U.S. Bancorp 2024 Annual Report
2023, the Company's average daily LCR was 106.6 percent
and 109.2 percent, respectively. The Company was
compliant with this requirement for both of these periods.
The Company is also subject to a regulatory Net Stable
Funding Ratio (“NSFR”) requirement which requires large
banking organizations to maintain a minimum level of stable
funding based on the liquidity characteristics of their
assets, commitments, and derivative exposures over a one-
year time horizon. The Company was compliant with this
requirement at December 31, 2024 and December 31,
2023.
European Exposures The Company provides merchant
processing and corporate trust services in Europe either
directly or through banking affiliations in Europe. Revenue
generated from sources in Europe represented
approximately 2 percent of the Company’s total net revenue
for 2024. Operating cash for these businesses is deposited
on a short-term basis typically with certain European central
banks. For deposits placed at other European banks,
exposure is mitigated by the Company placing deposits at
multiple banks and managing the amounts on deposit at
any bank based on institution-specific deposit limits. At
December 31, 2024, the Company had an aggregate
amount on deposit with European banks of approximately
$6.4 billion, predominately with the Central Bank of Ireland
and Bank of England.
In addition, the Company provides financing to domestic
multinational corporations that generate revenue from
customers in European countries, transacts with various
European banks as counterparties to certain derivative-
related activities, and through a subsidiary, manages
money market funds that hold certain investments in
European sovereign debt. Any deterioration in economic
conditions in Europe, including the impacts resulting from
the Russia-Ukraine conflict, is not expected to have a
significant effect on the Company related to these activities.
Commitments, Contingent Liabilities and Other
Contractual Obligations The Company participates in
many different contractual arrangements which may or may
not be recorded on its balance sheet, with unrelated or
consolidated entities, under which the Company has an
obligation to pay certain amounts, provide credit or liquidity
enhancements or provide market risk support. These
arrangements also include any obligation related to a
variable interest held in an unconsolidated entity that
provides financing, liquidity, credit enhancement or market
risk support.
In the ordinary course of business, the Company enters
into contractual obligations that may require future cash
payments, including funding for customer loan requests,
customer deposit maturities and withdrawals, debt service,
leases for premises and equipment, and other cash
commitments. Refer to Notes 6, 11, 13, 16 and 22 in the
Notes to Consolidated Financial Statements for information
on the Company’s operating lease obligations, deposits,
long-term debt, benefit obligations and guarantees and
other commitments, respectively.
Commitments to extend credit are legally binding and
generally have fixed expiration dates or other termination
clauses. Many of the Company’s commitments to extend
credit expire without being drawn and, therefore, total
commitment amounts do not necessarily represent future
liquidity requirements or the Company’s exposure to credit
loss. Commitments to extend credit also include consumer
credit lines that are cancellable upon notification to the
consumer. Total contractual amounts of commitments to
extend credit at December 31, 2024 were $409.4 billion.
The Company also issues and confirms various types of
letters of credit, including standby and commercial. Total
contractual amounts of letters of credit at December 31,
2024 were $11.0 billion. For more information on the
Company’s commitments to extend credit and letters of
credit, refer to Note 22 in the Notes to Consolidated
Financial Statements.
The Company’s off-balance sheet arrangements with
unconsolidated entities primarily consist of private
investment funds or partnerships that make equity
investments, provide debt financing or support community-
based investments in tax-advantaged projects. In addition
to providing investment returns, these arrangements in
many cases assist the Company in complying with
requirements of the Community Reinvestment Act. The
investments in these entities generate a return primarily
through the realization of federal and state income tax
credits and other tax benefits, such as tax deductions from
operating losses of the investments, over specified time
periods. The entities in which the Company invests are
generally considered variable interest entities (“VIEs”). The
Company’s recorded investment in these entities, net of
contractual equity investment commitments of $5.0 billion,
was $3.1 billion at December 31, 2024.
The Company also has non-controlling financial
investments in private funds and partnerships considered
VIEs. The Company’s recorded investment in these entities
was approximately $264 million at December 31, 2024, and
the Company had unfunded commitments to invest an
additional $118 million. For more information on the
Company’s interests in unconsolidated VIEs, refer to Note 7
in the Notes to Consolidated Financial Statements.
Guarantees are contingent commitments issued by the
Company to customers or other third parties requiring the
Company to perform if certain conditions exist or upon the
occurrence or nonoccurrence of a specified event, such as
a scheduled payment to be made under contract. The
Company’s primary guarantees include commitments from
securities lending activities in which indemnifications are
provided to customers; indemnification or buy-back
provisions related to sales of loans and tax credit
investments; and merchant charge-back guarantees
through the Company’s involvement in providing merchant
processing services. For certain guarantees, the Company
may have access to collateral to support the guarantee, or
through the exercise of other recourse provisions, be able
to offset some or all of any payments made under these
guarantees.
The Company and certain of its subsidiaries, along with
other Visa U.S.A. Inc. member banks, have a contingent
guarantee obligation to indemnify Visa Inc. for potential
losses arising from antitrust lawsuits challenging the
51
practices of Visa U.S.A. Inc. and MasterCard International.
The indemnification by the Company and other Visa U.S.A.
Inc. member banks has no maximum amount. Refer to Note
22 in the Notes to Consolidated Financial Statements for
further details regarding guarantees, other commitments,
and contingent liabilities, including maximum potential
future payments and current carrying amounts.
Capital Management The Company is committed to
managing capital to maintain strong protection for
depositors and creditors and for maximum shareholder
benefit. The Company also manages its capital to exceed
regulatory capital requirements for banking organizations.
To achieve its capital goals, the Company employs a
variety of capital management tools, including dividends,
common share repurchases, and the issuance of
subordinated debt, non-cumulative perpetual preferred
stock, common stock and other capital instruments.
The Company announced on September 12, 2024 that
its Board of Directors had approved a regular quarterly
dividend of $0.50 per common share. This represented a 2
percent increase over the previous dividend rate per
common share of $0.49 per quarter.
The Company also announced on September 12, 2024
that its Board of Directors authorized a share repurchase
program to repurchase up to $5.0 billion of its common
stock, effective September 13, 2024. This share repurchase
program replaced the previous share repurchase program
announced on December 22, 2020, which was terminated
effective on September 12, 2024.
Capital distributions, including dividends and stock
repurchases, are subject to the approval of the Company’s
Board of Directors and compliance with regulatory
requirements. For a more complete analysis of activities
impacting shareholders’ equity and capital management
programs, refer to Note 14 of the Notes to Consolidated
Financial Statements.
Total U.S. Bancorp shareholders’ equity was $58.6
billion at December 31, 2024, compared with $55.3 billion
at December 31, 2023. The increase was primarily the
result of corporate earnings, partially offset by dividends
paid.
The regulatory capital requirements effective for the
Company follow Basel III, with the Company being subject
to calculating its capital adequacy as a percentage of risk-
weighted assets under the standardized approach. Under
Basel III, banking regulators define minimum capital
requirements for banks and financial services holding
companies. These requirements are expressed in the form
of a minimum common equity tier 1 capital ratio, tier 1
capital ratio, total risk-based capital ratio, tier 1 leverage
ratio and a tier 1 total leverage exposure, or supplementary
leverage ratio. The Company’s minimum required level for
the common equity tier 1 capital, tier 1 capital and total
capital ratios included a stress capital buffer of 3.1 percent
at December 31, 2024. The Company targets its regulatory
capital levels, at both the bank and bank holding company
level, to exceed the “well-capitalized” threshold for these
ratios under the FDIC Improvement Act prompt corrective
action provisions that are applicable to all banks. Refer to
Note 14 of the Notes to Consolidated Financial Statements
for further detail on the Company’s minimum required
capital ratios and the minimum “well-capitalized” thresholds
under the prompt corrective action framework.
Beginning in 2022, the Company began to phase into its
regulatory capital requirements the cumulative deferred
impact of its 2020 adoption of the accounting guidance
related to the impairment of financial instruments based on
the current expected credit losses (“CECL”) methodology
plus 25 percent of its quarterly credit reserve increases
during 2020 and 2021. This cumulative deferred impact
was phased into the Company’s regulatory capital during
2022 through 2024, culminating with a fully phased in
regulatory capital calculation beginning in 2025.
52 U.S. Bancorp 2024 Annual Report
TABLE 22 Regulatory Capital Ratios
At December 31 (Dollars in Millions)
2024
2023
Basel III standardized approach:
Common shareholders’ equity
$ 51,770
$ 48,498
Less intangible assets
Goodwill (net of deferred tax liability)
(11,508)
(11,480)
Other disallowed intangible assets (net of deferred tax liability)
(1,846)
(2,278)
Other(a)
9,461
10,207
Common equity tier 1 capital
47,877
44,947
Qualifying preferred stock
6,808
6,808
Noncontrolling interests eligible for tier 1 capital
450
450
Other
(6)
(6)
Tier 1 capital
55,129
52,199
Eligible portion of allowance for credit losses
5,616
5,645
Subordinated debt and noncontrolling interests eligible for tier 2 capital
3,630
4,077
Tier 2 capital
9,246
9,722
Total risk-based capital
$ 64,375
$ 61,921
Risk-weighted assets
$ 450,498
$ 453,390
Common equity tier 1 capital as a percent of risk-weighted assets
10.6 %
9.9 %
Tier 1 capital as a percent of risk-weighted assets
12.2
11.5
Total risk-based capital as a percent of risk-weighted assets
14.3
13.7
Tier 1 capital as a percent of adjusted quarterly average assets (leverage ratio)
8.3
8.1
Tier 1 capital as a percent of total on- and off-balance sheet leverage exposure (total leverage exposure
ratio)
6.8
6.6
(a) Includes the impact of items included in other comprehensive income (loss), such as unrealized gains (losses) on available-for-sale securities, accumulated net gains on cash flow
hedges, pension liability adjustments, and the portion of deferred tax assets related to net operating loss and tax credit carryforwards not eligible for common equity tier 1 capital.
Table 22 provides a summary of statutory regulatory
capital ratios in effect for the Company at December 31,
2024 and 2023. All regulatory ratios exceeded regulatory
“well-capitalized” requirements. As of December 31, 2024,
U.S. Bank National Association (“USBNA”) also met all
regulatory capital ratios to be considered “well-capitalized”.
There are no conditions or events since December 31,
2024 that management believes have changed the risk-
based category of USBNA.
In July 2023, the U.S. federal bank regulatory authorities
proposed a rule to refine the Basel III capital framework for
financial institutions. The proposal incorporates elements of
the international Basel Committee’s post-crisis reforms,
including the Fundamental Review of the Trading Book to
replace the existing market risk rule, and introduces new
standardized approaches for credit risk, operational risk
and credit valuation adjustment (CVA) risk. The proposal’s
finalization could revise the risk-based capital measures
applicable to the Company; however, until the proposal is
finalized the exact impacts are unknown.
The Company believes certain other capital ratios are
useful in evaluating its capital adequacy. The Company’s
tangible common equity, as a percent of tangible assets
and as a percent of risk-weighted assets determined in
accordance with transitional regulatory capital
requirements related to the CECL methodology under the
standardized approach, were 5.8 percent and 8.5 percent,
respectively, at December 31, 2024, compared with 5.3
percent and 7.7 percent at December 31, 2023,
respectively. In addition, the Company’s common equity
tier 1 capital to risk-weighted assets ratio, reflecting the full
implementation of the CECL methodology, was 10.5
percent at December 31, 2024, compared with 9.7 percent
at December 31, 2023. Refer to “Non-GAAP Financial
Measures” beginning on page 57 for further information on
these other capital ratios.
As an approved mortgage seller and servicer, USBNA,
through its mortgage banking division, is required to
maintain various levels of shareholder’s equity, as specified
by various agencies, including the United States
Department of Housing and Urban Development,
Government National Mortgage Association, Federal Home
Loan Mortgage Corporation and the Federal National
Mortgage Association. At December 31, 2024, USBNA met
these requirements.
53
Business Segment Financial Review
The Company’s major business segments are Wealth,
Corporate, Commercial and Institutional Banking,
Consumer and Business Banking, Payment Services, and
Treasury and Corporate Support.
Basis for Financial Presentation Business segment
results are derived from the Company’s business unit
profitability reporting systems by specifically attributing
managed balance sheet assets, deposits and other
liabilities and their related income or expense. Refer to Note
23 of the Notes to Consolidated Financial Statements for
further information on the business segments’ basis for
financial presentation.
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
2024 and 2023, certain organization and methodology
changes were made, including revising the Company’s
business segment funds transfer-pricing methodology
related to deposits and loans during the second quarter of
2024 and combining its Wealth Management and
Investment Services and Corporate and Commercial
Banking business segments to create the Wealth,
Corporate, Commercial and Institutional Banking business
segment during the third quarter of 2023. Prior period
results were recast and presented on a comparable basis.
Wealth, Corporate, Commercial and Institutional
Banking Wealth, Corporate, Commercial and Institutional
Banking provides core banking, specialized lending,
transaction and payment processing, capital markets, asset
management, and brokerage and investment related
services to wealth, middle market, large corporate,
commercial real estate, government and institutional
clients. Wealth, Corporate, Commercial and Institutional
Banking contributed $4.8 billion of the Company’s net
income in 2024, or an increase of $105 million (2.3
percent), compared with 2023.
Net revenue increased $190 million (1.6 percent) in
2024, compared with 2023. Net interest income, on a
taxable-equivalent basis, decreased $217 million (2.8
percent) in 2024, compared with 2023, primarily due to the
impact of deposit mix and pricing. Noninterest income
increased $407 million (9.8 percent) in 2024, compared
with 2023, primarily due to higher trust and investment
management fees and commercial products revenue, both
driven by business growth and favorable market conditions.
Noninterest expense increased $5 million (0.1 percent)
in 2024, compared with 2023, primarily due to higher
compensation and employee benefits expense. The
provision for credit losses increased $45 million (13.2
percent) in 2024, compared with 2023, primarily due to
higher net charge-offs.
Consumer and Business Banking Consumer and
Business Banking comprises consumer banking, small
business banking and consumer lending. Products and
services are delivered through banking offices, telephone
servicing and sales, online services, direct mail, ATMs,
mobile devices, distributed mortgage loan officers, and
intermediary relationships including auto dealerships,
mortgage banks, and strategic business partners.
Consumer and Business Banking contributed $1.9 billion of
the Company’s net income in 2024, or a decrease of
$673 million (26.3 percent), compared with 2023.
Net revenue decreased $1.1 billion (10.6 percent) in
2024, compared with 2023. Net interest income, on a
taxable-equivalent basis, decreased $1.0 billion (11.8
percent) in 2024, compared with 2023, due to the impact of
deposit mix and pricing. Noninterest income decreased
$69 million (4.1 percent) in 2024, compared with 2023,
primarily due to lower service charges, partially offset by
higher mortgage banking revenue.
Noninterest expense decreased $300 million (4.4
percent) in 2024, compared with 2023, primarily due to
lower compensation and employee benefits expense and
net shared services expense. The provision for credit
losses increased $104 million in 2024, compared with 2023,
primarily due to normalizing credit conditions.
Payment Services Payment Services includes consumer
and business credit cards, stored-value cards, debit cards,
corporate, government and purchasing card services and
merchant processing. Payment Services contributed $1.0
billion of the Company’s net income in 2024, or an increase
of $7 million (0.7 percent), compared with 2023.
Net revenue increased $365 million (5.5 percent) in
2024, compared with 2023. Net interest income, on a
taxable-equivalent basis, increased $222 million (8.5
percent) in 2024, compared with 2023, primarily due to
higher loan balances, partially offset by higher funding
costs. Noninterest income increased $143 million (3.5
percent) in 2024, compared with 2023, driven by higher
card revenue due to favorable rates, and higher merchant
processing services revenue due to business volume
growth.
Noninterest expense increased $135 million (3.4
percent) in 2024, compared with 2023, reflecting higher net
shared services expense. The provision for credit losses
increased $220 million (15.8 percent) in 2024, compared
with 2023, primarily due to higher net charge-offs.
Treasury and Corporate Support Treasury and Corporate
Support includes the Company’s investment portfolios,
funding, capital management, interest rate risk
management, income taxes not allocated to the business
lines, including most investments in tax-advantaged
projects, and the residual aggregate of those expenses
associated with corporate activities that are managed on a
consolidated basis. Treasury and Corporate Support
recorded a net loss of $1.4 billion in 2024, compared with a
net loss of $2.8 billion in 2023.
Net revenue decreased $150 million (17.0 percent) in
2024, compared with 2023. Net interest income, on a
taxable-equivalent basis, decreased $98 million (6.0
percent) in 2024, compared with 2023, primarily due to
higher funding costs, partially offset by higher rates on
earning assets and balance sheet growth. Noninterest
income decreased $52 million (7.0 percent) in 2024,
54 U.S. Bancorp 2024 Annual Report
compared with 2023, primarily due to a decrease in other
revenue, partially offset by the impact of a gain on the sale
of mortgage servicing rights during 2024.
Noninterest expense decreased $1.5 billion (57.8
percent) in 2024, compared with 2023, primarily due to
lower merger and integration charges and lower FDIC
special assessment charges, partially offset by higher
compensation and employee benefits expense. The
provision for credit losses was $406 million (87.7 percent)
lower in 2024, compared with 2023, primarily due to the
impact of balance sheet repositioning and capital
management actions in 2023.
Income taxes are assessed to each business segment
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.
55
TABLE 23 Business Segment Financial Performance
Wealth, Corporate, Commercial and
Consumer and
Institutional Banking
Business Banking
Payment Services
Year Ended December 31
Percent
Percent
Percent
(Dollars in Millions)
2024
2023
Change
2024
2023
Change
2024
2023
Change
Condensed Income Statement
Net interest income (taxable-equivalent basis) $
7,645 $
7,862
(2.8)% $
7,658 $
8,683
(11.8)% $
2,831 $
2,609
8.5 %
Noninterest income
4,548
4,141
9.8
1,606
1,675
(4.1)
4,198
4,055
3.5
Total net revenue
12,193
12,003
1.6
9,264
10,358
(10.6)
7,029
6,664
5.5
Noninterest expense
5,449
5,444
.1
6,569
6,869
(4.4)
4,055
3,920
3.4
Income (loss) before provision and income
taxes
6,744
6,559
2.8
2,695
3,489
(22.8)
2,974
2,744
8.4
Provision for credit losses
385
340
13.2
182
78
*
1,614
1,394
15.8
Income (loss) before income taxes
6,359
6,219
2.3
2,513
3,411
(26.3)
1,360
1,350
.7
Income taxes and taxable-equivalent
adjustment
1,590
1,555
2.3
629
854
(26.3)
340
337
.9
Net income (loss)
4,769
4,664
2.3
1,884
2,557
(26.3)
1,020
1,013
.7
Net (income) loss attributable to
noncontrolling interests
—
—
—
—
—
—
—
—
—
Net income (loss) attributable to U.S. Bancorp $
4,769 $
4,664
2.3
$
1,884 $
2,557
(26.3)
$
1,020 $
1,013
.7
Average Balance Sheet
Loans
$ 172,466 $ 175,836
(1.9)
$ 155,088 $ 162,012
(4.3)
$ 41,081 $ 38,471
6.8
Goodwill
4,825
4,682
3.1
4,326
4,466
(3.1)
3,357
3,327
.9
Other intangible assets
981
1,007
(2.6)
4,539
5,264
(13.8)
277
352
(21.3)
Assets
201,362
202,701
(.7)
168,913
179,247
(5.8)
47,169
44,291
6.5
Noninterest-bearing deposits
56,760
70,908
(20.0)
20,810
30,967
(32.8)
2,685
2,981
(9.9)
Interest-bearing deposits
214,622
203,038
5.7
200,611
185,712
8.0
96
103
(6.8)
Total deposits
271,382
273,946
(.9)
221,421
216,679
2.2
2,781
3,084
(9.8)
Total U.S. Bancorp shareholders’ equity
21,438
22,366
(4.1)
14,426
16,026
(10.0)
10,005
9,310
7.5
Treasury and
Consolidated
Corporate Support
Company
Year Ended December 31
Percent
Percent
(Dollars in Millions)
2024
2023
Change
2024
2023
Change
Condensed Income Statement
Net interest income (taxable-equivalent basis) $ (1,725) $ (1,627)
(6.0)% $ 16,409 $ 17,527
(6.4)%
Noninterest income
694
746
(7.0)
11,046
10,617
4.0
Total net revenue
(1,031)
(881) (17.0)
27,455
28,144
(2.4)
Noninterest expense
1,115
2,640
(57.8)
17,188
18,873
(8.9)
Income (loss) before provision and income
taxes
(2,146)
(3,521)
39.1
10,267
9,271
10.7
Provision for credit losses
57
463
(87.7)
2,238
2,275
(1.6)
Income (loss) before income taxes
(2,203)
(3,984)
44.7
8,029
6,996
14.8
Income taxes and taxable-equivalent
adjustment
(859)
(1,208)
28.9
1,700
1,538
10.5
Net income (loss)
(1,344)
(2,776)
51.6
6,329
5,458
16.0
Net (income) loss attributable to
noncontrolling interests
(30)
(29)
(3.4)
(30)
(29)
(3.4)
Net income (loss) attributable to U.S. Bancorp $ (1,374) $ (2,805)
51.0
$
6,299 $
5,429
16.0
Average Balance Sheet
Loans
$
5,240 $
4,956
5.7
$ 373,875 $ 381,275
(1.9)
Goodwill
—
—
—
12,508
12,475
.3
Other intangible assets
9
16
(43.8)
5,806
6,639
(12.5)
Assets
246,570
237,201
3.9
664,014
663,440
.1
Noninterest-bearing deposits
2,752
2,912
(5.5)
83,007
107,768
(23.0)
Interest-bearing deposits
11,179
9,042
23.6
426,508
397,895
7.2
Total deposits
13,931
11,954
16.5
509,515
505,663
.8
Total U.S. Bancorp shareholders’ equity
11,337
5,958
90.3
57,206
53,660
6.6
*
Not meaningful
56 U.S. Bancorp 2024 Annual Report
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, and
• Common equity tier 1 capital to risk-weighted assets,
reflecting the full implementation of the CECL
methodology.
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 full impact of the 2020 adoption of
accounting guidance related to impairment of financial
instruments based on the CECL 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 discloses the return on tangible common
equity ratio and tangible book value per share as it believes
they are useful financial measures to assess the Company's
use of equity.
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 utilize net interest income on
a taxable-equivalent basis, including the efficiency ratio
and net interest margin.
The Company also discloses percent of net revenue for
its business lines excluding Treasury and Corporate
Support to highlight the contributions to net revenue from
the Company's core revenue-producing businesses.
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 report in their entirety,
and not to rely on any single financial measure.
57
The following tables show the Company’s calculation of these non-GAAP financial measures:
At December 31 (Dollars in Millions)
2024
2023
2022
Total equity
$ 59,040
$ 55,771
$ 51,232
Preferred stock
(6,808)
(6,808)
(6,808)
Noncontrolling interests
(462)
(465)
(466)
Common equity(1)
51,770
48,498
43,958
Goodwill (net of deferred tax liability)(a)
(11,508)
(11,480)
(11,395)
Intangible assets (net of deferred tax liability), other than mortgage servicing rights
(1,846)
(2,278)
(2,792)
Tangible common equity(2)
38,416
34,740
29,771
Common equity tier 1 capital, determined in accordance with transitional regulatory capital
requirements related to the CECL methodology implementation
47,877
44,947
41,560
Adjustments(b)
(433)
(866)
(1,299)
Common equity tier 1 capital, reflecting the full implementation of the CECL methodology(3)
47,444
44,081
40,261
Total assets(4)
678,318
663,491
674,805
Goodwill (net of deferred tax liability)(a)
(11,508)
(11,480)
(11,395)
Intangible assets (net of deferred tax liability), other than mortgage servicing rights
(1,846)
(2,278)
(2,792)
Tangible assets(5)
664,964
649,733
660,618
Risk-weighted assets, determined in accordance with prescribed regulatory capital
requirements effective for the Company(6)
450,498
453,390
496,500
Adjustments(c)
(368)
(736)
(620)
Risk-weighted assets, reflecting the full implementation of the CECL methodology(7)
450,130
452,654
495,880
Ratios
Common equity to assets(1)/(4)
7.6 %
7.3 %
6.5 %
Tangible common equity to tangible assets(2)/(5)
5.8
5.3
4.5
Tangible common equity to risk-weighted assets(2)/(6)
8.5
7.7
6.0
Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the
CECL methodology(3)/(7)
10.5
9.7
8.1
(a) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements.
(b) Includes the estimated increase in the allowance for credit losses related to the adoption of the CECL methodology net of deferred taxes.
(c) Includes the impact of the estimated increase in the allowance for credit losses related to the adoption of the CECL methodology.
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Net interest income
$ 16,289
$ 17,396
$ 14,728
Taxable-equivalent adjustment(a)
120
131
118
Net interest income, on a taxable-equivalent basis
16,409
17,527
14,846
Net interest income, on a taxable-equivalent basis (as calculated above)
16,409
17,527
14,846
Noninterest income
11,046
10,617
9,456
Less: Securities gains (losses), net
(154)
(145)
20
Total net revenue, excluding net securities gains (losses)(1)
27,609
28,289
24,282
Noninterest expense(2)
17,188
18,873
14,906
Efficiency ratio(2)/(1)
62.3 %
66.7 %
61.4 %
(a) Based on federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes.
58 U.S. Bancorp 2024 Annual Report
Net Revenue as a Percent of the
Net Revenue as a
Consolidated Company
Percent of the
Excluding Treasury and
Year Ended December 31, 2024 (Dollars in Millions)
Net Revenue Consolidated Company
Corporate Support
Wealth, Corporate, Commercial and Institutional Banking
$
12,193
44 %
43 %
Consumer and Business Banking
9,264
34
32
Payment Services
7,029
26
25
Treasury and Corporate Support
(1,031)
(4)
Consolidated Company
27,455
100 %
Less: Treasury and Corporate Support
(1,031)
Consolidated Company excluding Treasury and Corporate Support
$
28,486
100 %
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Net income applicable to U.S. Bancorp common shareholders
$
5,909
$
5,051
$
5,501
Intangible amortization (net-of-tax)
450
502
Net income applicable to U.S. Bancorp common shareholders, excluding
intangibles amortization(1)
6,359
5,553
5,671
Average total equity
57,668
54,125
50,882
Average preferred stock
(6,808)
(6,808)
(6,761)
Average noncontrolling interests
(462)
(465)
(466)
Average goodwill (net of deferred tax liability)(a)
(11,485)
(11,485)
(9,240)
Average intangible assets (net of deferred tax liability), other than mortgage
servicing rights
(2,040)
(2,480)
(991)
Average tangible common equity(2)
36,873
32,887
33,424
Return on tangible common equity(1)/(2)
17.2 %
16.9 %
17.0 %
(a) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements.
Percent
At December 31 (Dollars in Millions, Except Per Share Data)
2024
2023
Change
Common equity
$
51,770 $
48,498
Goodwill (net of deferred tax liability)(a)
(11,508)
(11,480)
Intangible assets (net of deferred tax liability), other than mortgage servicing rights
(1,846)
(2,278)
Tangible common equity(1)
38,416
34,740
Common shares outstanding(2)
1,560
1,558
Tangible book value per common share(1)/(2)
$
24.63 $
22.30
10.4 %
(a) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements.
Accounting Changes
Note 2 of the Notes to Consolidated Financial Statements
discusses accounting standards recently issued but not yet
required to be adopted and the expected impact of these
changes in accounting standards. To the extent the
adoption of new accounting standards materially affects the
Company’s financial condition or results of operations, the
impacts are discussed in the applicable section(s) of the
Management’s Discussion and Analysis and the Notes to
Consolidated Financial Statements.
Critical Accounting Policies
The accounting and reporting policies of the Company
comply with accounting principles generally accepted in
the United States and conform to general practices within
the banking industry. The preparation of financial
statements in conformity with GAAP requires management
to make estimates and assumptions. The Company’s
financial position and results of operations can be affected
by these estimates and assumptions, which are integral to
understanding the Company’s financial statements. Critical
accounting policies are those policies management
believes are the most important to the portrayal of the
Company’s financial condition and results, and require
management to make estimates that are difficult, subjective
or complex. Most accounting policies are not considered
by management to be critical accounting policies. Several
factors are considered in determining whether or not a
policy is critical in the preparation of financial statements.
These factors include, among other things, whether the
estimates are significant to the financial statements, the
nature of the estimates, the ability to readily validate the
estimates with other information (including third-party
sources or available prices), sensitivity of the estimates to
changes in economic conditions and whether alternative
accounting methods may be utilized under GAAP.
170
59
Management has discussed the development and the
selection of critical accounting policies with the Company’s
Audit Committee.
Significant accounting policies are discussed in Note 1
of the Notes to Consolidated Financial Statements. Those
policies considered to be critical accounting policies are
described below.
Allowance for Credit Losses Management’s evaluation of
the appropriate allowance for credit losses is often the most
critical of all the accounting estimates for a banking
institution. It is an inherently subjective process impacted
by many factors as discussed throughout the
Management’s Discussion and Analysis section of the
Annual Report.
The methods utilized to estimate the allowance for credit
losses, key assumptions and quantitative and qualitative
information considered by management in determining the
appropriate allowance for credit losses at December 31,
2024 are discussed in the “Credit Risk Management”
section. Although methodologies utilized to determine each
element of the allowance reflect management’s assessment
of credit risk, imprecision exists in these measurement tools
due in part to subjective judgments involved and an
inherent lag in the data available to quantify current
conditions and events that affect credit loss reserve
estimates.
Given the many quantitative variables and subjective
factors affecting the credit portfolio, changes in the
allowance for credit losses may not directly coincide with
changes in risk ratings or delinquency status within loan
and lease portfolios. This is in part due to the timing of the
risk rating process in relation to changes in the business
cycle, the exposure and mix of loans within risk rating
categories, levels of nonperforming loans and the timing of
charge-offs and expected recoveries. The allowance for
credit losses measures the expected loss content on the
remaining portfolio exposure, while nonperforming loans
and net charge-offs are measures of specific impairment
events that have already been confirmed. Therefore, the
degree of change in the forward-looking expected loss in
the allowance may differ from the level of changes in
nonperforming loans and net charge-offs. Management
maintains an appropriate allowance for credit losses by
updating allowance rates to reflect changes in expected
losses, including expected changes in economic or
business cycle conditions. Some factors considered in
determining the appropriate allowance for credit losses are
more readily quantifiable while other factors require
extensive qualitative judgment in determining the overall
level of the allowance for credit losses.
The Company considers a range of economic scenarios
in its determination of the allowance for credit losses. These
scenarios are constructed with interrelated projections of
multiple economic variables, and loss estimates are
produced that consider the historical correlation of those
economic variables with credit losses, and also the
expectation that conditions will eventually normalize over
the longer run. Scenarios worse than the Company’s
expected outcome at December 31, 2024 include risks of
persisting inflationary pressures, continued elevated
interest rates, declines in residential and commercial real
estate prices, high unemployment rates, supply shortages,
changing fiscal policy, geopolitical risks, tightening in bank
lending standards, and potential bank failures, which could
all precipitate a moderate to severe recession and result in
increased credit losses.
Under the range of economic scenarios considered, the
allowance for credit losses would have been lower by
$1.1 billion or higher by $2.0 billion. This range reflects the
sensitivity of the allowance for credit losses specifically
related to the range of economic scenarios considered as
of December 31, 2024.
Because several quantitative and qualitative factors are
considered in determining the allowance for credit losses,
these sensitivity analyses do not necessarily reflect the
nature and extent of future changes in the allowance for
credit losses. They are intended to provide insights into the
impact of adverse changes in the economy on the
Company’s modeled loss estimates for the loan portfolio
and do not imply any expectation of future deterioration in
the risk rating or loss rates. Given current processes
employed by the Company, management believes the risk
ratings and loss model estimates currently assigned are
appropriate. It is possible that others, given the same
information, may at any point in time reach different
reasonable conclusions that could be significant to the
Company’s financial statements. Refer to the “Analysis and
Determination of the Allowance for Credit Losses” section
for further information.
Fair Value Estimates A portion of the Company’s assets
and liabilities are carried at fair value on the Consolidated
Balance Sheet, with changes in fair value recorded either
through earnings or other comprehensive income (loss) in
accordance with applicable accounting principles
generally accepted in the United States. These include all
of the Company’s available-for-sale investment securities,
derivatives and other trading instruments, MSRs and
MLHFS. The estimation of fair value also affects other loans
held for sale, which are recorded at the lower-of-cost-or-fair
value. The determination of fair value is important for certain
other assets that are periodically evaluated for impairment
using fair value estimates, including goodwill.
Fair value is generally defined as the exit price at which
an asset or liability could be exchanged in a current
transaction between willing, unrelated parties, other than in
a forced or liquidation sale. Fair value is based on quoted
market prices in an active market, or if market prices are
not available, is estimated using models employing
techniques such as matrix pricing or discounting expected
cash flows. The significant assumptions used in the
models, which include assumptions for interest rates,
discount rates, prepayments and credit losses, are
independently verified against observable market data
where possible. Where observable market data is not
available, the estimate of fair value becomes more
subjective and involves a high degree of judgment. In this
circumstance, fair value is estimated based on
management’s judgment regarding the value that market
participants would assign to the asset or liability. This
valuation process takes into consideration factors such as
60 U.S. Bancorp 2024 Annual Report
market illiquidity. Imprecision in estimating these factors
can impact the amount recorded on the balance sheet for a
particular asset or liability with related impacts to earnings
or other comprehensive income (loss).
When available, trading and available-for-sale securities
are valued based on quoted market prices. However,
certain securities are traded less actively and, therefore,
quoted market prices may not be available. The
determination of fair value may require benchmarking to
similar instruments or performing a discounted cash flow
analysis using estimates of future cash flows and
prepayment, interest and default rates. For more
information on investment securities, refer to Note 4 of the
Notes to Consolidated Financial Statements.
As few derivative contracts are listed on an exchange,
the majority of the Company’s derivative positions are
valued using valuation techniques that use readily
observable market inputs. Certain derivatives, however,
must be valued using techniques that include unobservable
inputs. For these instruments, the significant assumptions
must be estimated and, therefore, are subject to judgment.
Note 19 of the Notes to Consolidated Financial Statements
provides a summary of the Company’s derivative positions.
Refer to Note 21 of the Notes to Consolidated Financial
Statements for additional information regarding estimations
of fair value.
Mortgage Servicing Rights MSRs are capitalized as
separate assets when loans are sold and servicing is
retained, or may be purchased from others. The Company
records MSRs at fair value. Because MSRs do not trade in
an active market with readily observable prices, the
Company determines the fair value by estimating the
present value of the asset’s future cash flows utilizing
market-based prepayment rates, option adjusted spread,
and other assumptions validated through comparison to
trade information, industry surveys and independent third-
party valuations. Changes in the fair value of MSRs are
recorded in earnings during the period in which they occur.
Risks inherent in the valuation of MSRs include higher than
expected prepayment rates and/or delayed receipt of cash
flows. The Company utilizes derivatives, including interest
rate swaps, swaptions, forward commitments to buy TBAs,
U.S. Treasury and Eurodollar futures and options on U.S.
Treasury futures, to mitigate the valuation risk. Refer to
Notes 9 and 21 of the Notes to Consolidated Financial
Statements for additional information on the assumptions
used in determining the fair value of MSRs and an analysis
of the sensitivity to changes in interest rates of the fair value
of the MSRs portfolio and the related derivative instruments
used to mitigate the valuation risk.
Income Taxes The Company estimates income tax
expense based on amounts expected to be owed to the
various tax jurisdictions in which it operates, including
federal, state and local domestic jurisdictions, and an
insignificant amount to foreign jurisdictions. The estimated
income tax expense is reported in the Consolidated
Statement of Income. Accrued taxes are reported in other
assets or other liabilities on the Consolidated Balance
Sheet and represent the net estimated amount due to or to
be received from taxing jurisdictions either currently or
deferred to future periods. Deferred taxes arise from
differences between assets and liabilities measured for
financial reporting purposes versus income tax reporting
purposes. Deferred tax assets are recognized if, in
management’s judgment, their realizability is determined to
be more likely than not. Uncertain tax positions that meet
the more likely than not recognition threshold are measured
to determine the amount of benefit to recognize. An
uncertain tax position is measured at the largest amount of
benefit management believes is more likely than not to be
realized upon settlement. In estimating accrued taxes, the
Company assesses the relative merits and risks of the
appropriate tax treatment considering statutory, judicial and
regulatory guidance in the context of the tax position.
Because of the complexity of tax laws and regulations,
interpretation can be difficult and subject to legal judgment
given specific facts and circumstances. It is possible that
others, given the same information, may at any point in time
reach different reasonable conclusions regarding the
estimated amounts of accrued taxes.
Changes in the estimate of accrued taxes occur
periodically due to changes in tax rates, interpretations of
tax laws, the status of examinations being conducted by
various taxing authorities, and newly enacted statutory,
judicial and regulatory guidance that impacts the relative
merits and risks of tax positions. These changes, when they
occur, affect accrued taxes and can be significant to the
operating results of the Company. Refer to Note 18 of the
Notes to Consolidated Financial Statements for additional
information regarding income taxes.
Controls and Procedures
Under the supervision and with the participation of the
Company’s management, including its principal executive
officer and principal financial officer, the Company has
evaluated the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)). Based
upon this evaluation, the principal executive officer and
principal financial officer have concluded that, as of the
end of the period covered by this report, the Company’s
disclosure controls and procedures were effective.
During the most recently completed fiscal quarter, there
was no change made in the Company’s internal control
over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that has materially
affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
The annual report of the Company’s management on
internal control over financial reporting is provided on page
62. The audit report of Ernst & Young LLP, the Company’s
independent accountants, regarding the Company’s
internal control over financial reporting is provided on page
63.
61
Report of Management
Responsibility for the financial statements and other information presented throughout this Annual Report rests with the
management of U.S. Bancorp. The Company believes the consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States and present the substance of transactions based on the
circumstances and management’s best estimates and judgment.
In meeting its responsibilities for the reliability of the financial statements, management is responsible for establishing and
maintaining an adequate system of internal control over financial reporting as defined by Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934, as amended. The Company’s system of internal control is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of publicly filed financial statements in accordance
with accounting principles generally accepted in the United States.
To test compliance, the Company carries out an extensive audit program. This program includes a review for compliance with
written policies and procedures and a comprehensive review of the adequacy and effectiveness of the system of internal control.
Although control procedures are designed and tested, it must be recognized that there are limits inherent in all systems of
internal control, and, therefore, errors and irregularities may nevertheless occur. Projection of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
The Board of Directors of the Company has an Audit Committee composed of directors who are independent of U.S. Bancorp.
The Audit Committee meets periodically with management, the internal auditors and the independent accountants to consider
audit results and to discuss internal accounting control, auditing and financial reporting matters.
Management assessed the effectiveness of the Company’s system of internal control over financial reporting as of December 31,
2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in its Internal Control—Integrated Framework (2013 framework). Based on its assessment and those
criteria, management believes the Company maintained effective internal control over financial reporting as of December 31,
2024.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 has been audited by Ernst
& Young LLP, an independent registered public accounting firm, as stated in their accompanying report appearing on page 63.
62 U.S. Bancorp 2024 Annual Report
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of U.S. Bancorp
Opinion on Internal Control Over Financial Reporting
We have audited U.S. Bancorp’s internal control over financial reporting as of December 31, 2024, based on criteria established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) (the COSO criteria). In our opinion, U.S. Bancorp (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated
statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period
ended December 31, 2024, and the related notes and our report dated February 21, 2025 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management.
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are
a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Minneapolis, Minnesota
February 21, 2025
63
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of U.S. Bancorp
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of U.S. Bancorp (the Company) as of December 31, 2024 and
2023, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of
the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Allowance for Credit Losses
Description of the
The Company’s loan and lease portfolio and the associated allowance for credit losses (ACL), were
Matter
$379.8 billion and $7.9 billion as of December 31, 2024, respectively. The provision for credit losses was
$2.2 billion for the year ended December 31, 2024. As discussed in Notes 1 and 5 to the financial
statements, the ACL is established for current expected credit losses on the Company’s loan and lease
portfolio, including unfunded credit commitments, by utilizing forward-looking expected loss models.
When determining expected losses, the Company uses multiple probability weighted economic
scenarios over a reasonable and supportable forecast period and then fully reverts to historical loss
experience to estimate losses over the remaining asset lives. Model estimates are adjusted to consider
any relevant changes in portfolio composition, lending policies, underwriting standards, risk
management practices, economic conditions or other factors that would affect the accuracy of the
model. Additionally, management may adjust the ACL for other qualitative factors such as model
imprecision, imprecision in economic scenario assumptions, and emerging risks related to either
changes in the environment that are affecting specific portfolio segments, or changes in portfolio
concentrations.
Auditing management’s ACL estimate and related provision for credit losses was complex due to the
highly judgmental nature of the probability weighted economic scenarios, expected loss models, as well
as model and qualitative factor adjustments.
64 U.S. Bancorp 2024 Annual Report
How We
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
Addressed the
Company’s controls over the ACL process, including management’s controls over: 1) development of
Matter in Our
baseline economic scenario, selection of alternative economic scenarios and implementation of these
Audit
scenarios and the probability weights assigned to them; 2) expected loss models, including model
validation, implementation, monitoring, the completeness and accuracy of key inputs and assumptions
used in the models, and management’s output assessment and related adjustments; 3) adjustments to
reflect management’s consideration of qualitative factors; 4) the ACL methodology and governance
process.
With the support of specialists, we assessed the economic scenarios and related probability weights by,
among other procedures, evaluating management’s methodology and agreeing a sample of key
economic variables used to external sources. We also performed and considered the results of various
sensitivity analyses and analytical procedures, including comparison of a sample of the key economic
variables to alternative external sources, historical statistics and peer bank information.
With respect to expected loss models, with the support of specialists, we evaluated model calculation
design and reperformed the calculation for a sample of models. We also tested the appropriateness of
key inputs and assumptions used in these models by agreeing a sample of inputs to internal and external
sources. As to model adjustments, with the support of specialists, we evaluated management’s estimate
methodology and assessment of factors that could potentially impact the accuracy of expected loss
models. We also recalculated a sample of model adjustments and tested internal and external data used
by agreeing a sample of inputs to internal and external sources.
Regarding the completeness of qualitative factors identified and incorporated into measuring the ACL,
with the support of specialists, we evaluated the potential impact of imprecision in the expected loss
models and economic scenario assumptions; emerging risks related to changes in the environment
impacting specific portfolio segments and portfolio concentrations. We also evaluated and tested internal
and external data used in the qualitative adjustments by agreeing significant inputs and underlying data to
internal and external sources.
We evaluated the overall ACL amount, including model estimates and adjustments, qualitative factors
adjustments, and whether the recorded ACL appropriately reflects expected credit losses on the loan and
lease portfolio and unfunded credit commitments. We reviewed historical loss statistics, peer-bank
information, subsequent events and transactions and considered whether they corroborate or contradict
the Company’s measurement of the ACL. We searched for and evaluated information that corroborates or
contradicts management’s forecasted assumptions and related probability weights as well as
identification and measurement of adjustments to model estimates and qualitative factors.
We have served as the Company’s auditor since 2003.
Minneapolis, Minnesota
February 21, 2025
65
Consolidated Financial Statements and Notes Table of Contents
Consolidated Financial Statements
Consolidated Balance Sheet
67
Consolidated Statement of Income
68
Consolidated Statement of Comprehensive Income
69
Consolidated Statement of Shareholders’ Equity
70
Consolidated Statement of Cash Flows
71
Notes to Consolidated Financial Statements
Note 1 — Significant Accounting Policies
72
Note 2 — Accounting Changes
78
Note 3 — Restrictions on Cash and Due From Banks
79
Note 4 — Investment Securities
80
Note 5 — Loans and Allowance for Credit Losses
83
Note 6 — Leases
91
Note 7 — Accounting for Transfers and Servicing of Financial Assets and Variable Interest Entities
92
Note 8 — Premises and Equipment
94
Note 9 — Mortgage Servicing Rights
94
Note 10 — Intangible Assets
95
Note 11 — Deposits
96
Note 12 — Short-Term Borrowings
97
Note 13 — Long-Term Debt
97
Note 14 — Shareholders’ Equity
98
Note 15 — Earnings Per Share
103
Note 16 — Employee Benefits
103
Note 17 — Stock-Based Compensation
107
Note 18 — Income Taxes
109
Note 19 — Derivative Instruments
111
Note 20 — Netting Arrangements for Certain Financial Instruments and Securities Financing Activities
116
Note 21 — Fair Values of Assets and Liabilities
119
Note 22 — Guarantees and Contingent Liabilities
125
Note 23 — Business Segments
128
Note 24 — U.S. Bancorp (Parent Company)
132
Note 25 — Subsequent Events
133
66 U.S. Bancorp 2024 Annual Report
U.S. Bancorp
Consolidated Balance Sheet
At December 31 (Dollars in Millions)
2024
2023
Assets
Cash and due from banks
$
56,502 $
61,192
Investment securities
Held-to-maturity (fair value $66,275 and $74,088, respectively)
78,634
84,045
Available-for-sale ($320 and $338 pledged as collateral, respectively)(a)
85,992
69,706
Loans held for sale (including $2,251 and $2,011 of mortgage loans carried at fair value, respectively)
2,573
2,201
Loans
Commercial
139,484
131,881
Commercial real estate
48,859
53,455
Residential mortgages
118,813
115,530
Credit card
30,350
28,560
Other retail
42,326
44,409
Total loans
379,832
373,835
Less allowance for loan losses
(7,583)
(7,379)
Net loans
372,249
366,456
Premises and equipment
3,565
3,623
Goodwill
12,536
12,489
Other intangible assets
5,547
6,084
Other assets (including $7,501 and $3,548 of trading securities at fair value pledged as collateral,
respectively)(a)
60,720
57,695
Total assets
$
678,318 $
663,491
Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing
$
84,158 $
89,989
Interest-bearing (including $5,754 and $2,818 of time deposits carried at fair value, respectively)
434,151
422,323
Total deposits
518,309
512,312
Short-term borrowings
15,518
15,279
Long-term debt
58,002
51,480
Other liabilities
27,449
28,649
Total liabilities
619,278
607,720
Shareholders’ equity
Preferred stock
6,808
6,808
Common stock, $.01 par value per share, authorized: 4,000,000,000 shares; issued: 2024 and 2023 —
2,125,725,742 shares
21
21
Capital surplus
8,715
8,673
Retained earnings
76,863
74,026
Less cost of common stock in treasury: 2024 — 565,929,654 shares; 2023 — 567,732,687 shares
(24,065)
(24,126)
Accumulated other comprehensive income (loss)
(9,764)
(10,096)
Total U.S. Bancorp shareholders’ equity
58,578
55,306
Noncontrolling interests
462
465
Total equity
59,040
55,771
Total liabilities and equity
$
678,318 $
663,491
(a) Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.
See Notes to Consolidated Financial Statements.
67
U.S. Bancorp
Consolidated Statement of Income
Year Ended December 31 (Dollars and Shares in Millions, Except Per Share Data)
2024
2023
2022
Interest Income
Loans
$ 23,009 $ 22,324 $ 13,603
Loans held for sale
173
147
201
Investment securities
5,111
4,485
3,378
Other interest income
3,373
3,051
763
Total interest income
31,666
30,007
17,945
Interest Expense
Deposits
11,688
8,775
1,872
Short-term borrowings
1,107
1,971
565
Long-term debt
2,582
1,865
780
Total interest expense
15,377
12,611
3,217
Net interest income
16,289
17,396
14,728
Provision for credit losses
2,238
2,275
1,977
Net interest income after provision for credit losses
14,051
15,121
12,751
Noninterest Income
Card revenue
1,679
1,630
1,512
Corporate payment products revenue
773
759
698
Merchant processing services
1,714
1,659
1,579
Trust and investment management fees
2,660
2,459
2,209
Service charges
1,253
1,306
1,298
Commercial products revenue
1,523
1,372
1,105
Mortgage banking revenue
627
540
527
Investment products fees
330
279
235
Securities gains (losses), net
(154)
(145)
20
Other
641
758
273
Total noninterest income
11,046
10,617
9,456
Noninterest Expense
Compensation and employee benefits
10,554
10,416
9,157
Net occupancy and equipment
1,246
1,266
1,096
Professional services
491
560
529
Marketing and business development
619
726
456
Technology and communications
2,074
2,049
1,726
Other intangibles
569
636
215
Merger and integration charges
155
1,009
329
Other
1,480
2,211
1,398
Total noninterest expense
17,188
18,873
14,906
Income before income taxes
7,909
6,865
7,301
Applicable income taxes
1,580
1,407
1,463
Net income
6,329
5,458
5,838
Net (income) loss attributable to noncontrolling interests
(30)
(29)
(13)
Net income attributable to U.S. Bancorp
$
6,299 $
5,429 $
5,825
Net income applicable to U.S. Bancorp common shareholders
$
5,909 $
5,051 $
5,501
Earnings per common share
$
3.79 $
3.27 $
3.69
Diluted earnings per common share
$
3.79 $
3.27 $
3.69
Average common shares outstanding
1,560
1,543
1,489
Average diluted common shares outstanding
1,561
1,543
1,490
See Notes to Consolidated Financial Statements.
68 U.S. Bancorp 2024 Annual Report
U.S. Bancorp
Consolidated Statement of Comprehensive Income
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Net income
$
6,329 $
5,458 $
5,838
Other Comprehensive Income (Loss)
Changes in unrealized gains (losses) on investment securities available-for-sale
(60)
1,500
(13,656)
Changes in unrealized gains (losses) on derivative hedges
(676)
(252)
(75)
Changes in debit valuation adjustments
1
—
—
Foreign currency translation
18
21
(10)
Changes in unrealized gains (losses) on retirement plans
245
(262)
526
Reclassification to earnings of realized (gains) losses
910
748
544
Income taxes related to other comprehensive income (loss)
(106)
(444)
3,207
Total other comprehensive income (loss)
332
1,311
(9,464)
Comprehensive income (loss)
6,661
6,769
(3,626)
Comprehensive (income) loss attributable to noncontrolling interests
(30)
(29)
(13)
Comprehensive income (loss) attributable to U.S. Bancorp
$
6,631 $
6,740 $ (3,639)
See Notes to Consolidated Financial Statements.
69
U.S. Bancorp
Consolidated Statement of Shareholders’ Equity
U.S. Bancorp Shareholders
Accumulated
Total U.S.
Common
Other
Bancorp
(Dollars and Shares in Millions, Except Per
Shares Preferred Common
Capital
Retained
Treasury
Comprehensive
Shareholders’ Noncontrolling
Total
Share Data)
Outstanding
Stock
Stock
Surplus
Earnings
Stock
Income (Loss)
Equity
Interests
Equity
Balance December 31, 2021
1,484 $ 6,371 $
21 $ 8,539 $ 69,201 $(27,271) $
(1,943) $
54,918 $
469 $ 55,387
Net income (loss)
5,825
5,825
13
5,838
Other comprehensive income (loss)
Preferred stock dividends(a)
(296)
(9,464)
(9,464)
(296)
(9,464)
(296)
Common stock dividends ($1.88 per
share)
Issuance of preferred stock
437
(2,829)
(2,829)
437
(2,829)
437
Issuance of common and treasury stock
48
(32)
2,071
2,039
2,039
Purchase of treasury stock
(1)
(69)
(69)
(69)
Distributions to noncontrolling interests
—
(13)
(13)
Net other changes in noncontrolling
interests
—
(3)
(3)
Stock option and restricted stock grants
205
205
205
Balance December 31, 2022
1,531 $ 6,808 $
21 $ 8,712 $ 71,901 $(25,269) $
(11,407) $
50,766 $
466 $ 51,232
Change in accounting principle(b)
46
46
46
Net income (loss)
5,429
5,429
29
5,458
Other comprehensive income (loss)
1,311
1,311
1,311
Preferred stock dividends(c)
(350)
(350)
(350)
Common stock dividends ($1.93 per
share)
Issuance of common and treasury stock
28
(264)
(3,000)
1,205
(3,000)
941
(3,000)
941
Purchase of treasury stock
(1)
(62)
(62)
(62)
Distributions to noncontrolling interests
—
(29)
(29)
Net other changes in noncontrolling
interests
—
(1)
(1)
Stock option and restricted stock grants
225
225
225
Balance December 31, 2023
1,558 $ 6,808 $
21 $ 8,673 $ 74,026 $(24,126) $
(10,096) $
55,306 $
465 $ 55,771
Net income (loss)
6,299
6,299
30
6,329
Other comprehensive income (loss)
332
332
332
Preferred stock dividends(d)
(352)
(352)
(352)
Common stock dividends ($1.98 per
share)
Issuance of common and treasury stock
6
(199)
(3,110)
234
(3,110)
35
(3,110)
35
Purchase of treasury stock
(4)
(173)
(173)
(173)
Distributions to noncontrolling interests
—
(30)
(30)
Net other changes in noncontrolling
interests
—
(3)
(3)
Stock option and restricted stock grants
241
241
241
Balance December 31, 2024
1,560 $ 6,808 $
21 $ 8,715 $ 76,863 $(24,065) $
(9,764) $
58,578 $
462 $ 59,040
(a) Reflects dividends declared per share on the Company’s Series A, Series B, Series J, Series K, Series L, Series M, Series N, and Series O Non-Cumulative Perpetual Preferred
Stock of $3,965.458, $962.487, $1,325.00, $1,375.00, $937.50, $1,000.00, $925.00, and $1,050.00, respectively.
(b) Effective January 1, 2023, the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings. Upon adoption,
the Company reduced its allowance for credit losses and increased retained earnings net of deferred taxes through a cumulative-effect adjustment
(c) Reflects dividends declared per share on the Company’s Series A, Series B, Series J, Series K, Series L, Series M, Series N, and Series O Non-Cumulative Perpetual Preferred
Stock of $6,439.904, $1,503.518, $1,325.00, $1,375.00, $937.50, $1,000.00, $925.00, and $1,125.00, respectively.
(d) Reflects dividends declared per share on the Company’s Series A, Series B, Series J, Series K, Series L, Series M, Series N and Series O Non-Cumulative Perpetual Preferred
Stock of $6,537.806, $1,527.702, $1,325.00, $1,375.00, $937.50, $1,000.00, $925.00, and $1,125.00, respectively.
See Notes to Consolidated Financial Statements.
70 U.S. Bancorp 2024 Annual Report
U.S. Bancorp
Consolidated Statement of Cash Flows
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Operating Activities
Net income attributable to U.S. Bancorp
$
6,299 $
5,429 $
5,825
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses
2,238
2,275
1,977
Depreciation and amortization of premises and equipment
370
382
345
Amortization of intangibles
569
636
215
(Gain) loss on sale of loans held for sale
(184)
7
387
(Gain) loss on sale of securities and other assets
123
119
(188)
Loans originated for sale, net of repayments
(24,225)
(26,936)
(33,127)
Proceeds from sales of loans held for sale
24,008
26,686
38,895
Other, net
2,075
(151)
6,790
Net cash provided by operating activities
11,273
8,447
21,119
Investing Activities
Proceeds from sales of available-for-sale investment securities
13,125
11,209
36,391
Proceeds from maturities of held-to-maturity investment securities
6,161
6,164
5,759
Proceeds from maturities of available-for-sale investment securities
6,006
6,314
14,927
Purchases of held-to-maturity investment securities
(246)
(932)
(7,091)
Purchases of available-for-sale investment securities
(35,886)
(8,342)
(24,592)
Net (increase) decrease in loans outstanding
(7,278)
3,829
(27,318)
Proceeds from sales of loans
645
5,707
4,420
Purchases of loans
(1,264)
(1,106)
(2,113)
Net (increase) decrease in securities purchased under agreements to resell
(3,859)
(2,404)
252
Net cash (paid for) received from acquisitions
(103)
(330)
12,257
Other, net
(1,835)
(1,184)
(5,392)
Net cash (used in) provided by investing activities
(24,534)
18,925
7,500
Financing Activities
Net increase (decrease) in deposits
6,001
(12,291)
(17,215)
Net increase (decrease) in short-term borrowings
239
(16,508)
15,213
Proceeds from issuance of long-term debt
12,017
15,583
8,732
Principal payments or redemption of long-term debt
(6,042)
(4,084)
(6,926)
Proceeds from issuance of preferred stock
—
—
437
Proceeds from issuance of common stock
32
951
21
Repurchase of preferred stock
—
—
(1,100)
Repurchase of common stock
(173)
(62)
(69)
Cash dividends paid on preferred stock
(356)
(341)
(299)
Cash dividends paid on common stock
(3,092)
(2,970)
(2,776)
Other, net
(55)
—
—
Net cash provided by (used in) financing activities
8,571
(19,722)
(3,982)
Change in cash and due from banks
(4,690)
7,650
24,637
Cash and due from banks at beginning of period
61,192
53,542
28,905
Cash and due from banks at end of period
$
56,502 $
61,192 $
53,542
Supplemental Cash Flow Disclosures
Cash paid for income taxes
$
499 $
645 $
767
Cash paid for interest
15,382
12,282
2,717
Noncash transfer of available-for-sale investment securities to held-to-maturity
—
—
40,695
Net noncash transfers to foreclosed property
24
26
23
Acquisitions
Assets acquired (sold)
$
106 $
(83) $ 106,209
Liabilities (assumed) sold
(3)
413
(95,753)
Net
$
103 $
330 $
10,456
See Notes to Consolidated Financial Statements.
71
Notes to Consolidated Financial Statements
NOTE 1 Significant Accounting Policies
U.S. Bancorp is a financial services holding company
headquartered in Minneapolis, Minnesota, serving millions
of local, national and global customers. U.S. Bancorp and
its subsidiaries (the “Company”) provide a full range of
financial services, including lending and depository
services through banking offices principally in the Midwest
and West regions of the United States, through online
services, over mobile devices and through other
distribution channels. The Company also engages in credit
card, merchant, and ATM processing, mortgage banking,
cash management, capital markets, insurance, trust and
investment management, brokerage, and leasing activities,
principally in domestic markets.
Basis of Presentation The consolidated financial
statements include the accounts of the Company and its
subsidiaries and all VIEs for which the Company has both
the power to direct the activities of the VIE that most
significantly impact the VIE’s economic performance, and
the obligation to absorb losses or right to receive benefits
of the VIE that could potentially be significant to the VIE.
Consolidation eliminates intercompany accounts and
transactions. Certain items in prior periods have been
reclassified to conform to the current period presentation.
Uses of Estimates The preparation of financial statements
in conformity with accounting principles generally accepted
in the United States requires management to make
estimates and assumptions that affect the amounts
reported in the financial statements and accompanying
notes. Actual experience could differ from those estimates
and assumptions.
Securities
Realized gains or losses on securities are determined on a
trade date basis based on the specific amortized cost of
the investments sold.
Trading Securities Securities held for resale are classified
as trading securities and are included in other assets and
reported at fair value. Changes in fair value and realized
gains or losses are reported in noninterest income.
Available-for-sale Securities Debt securities that are not
trading securities but may be sold before maturity in
response to changes in the Company’s interest rate risk
profile, funding needs, demand for collateralized deposits
by public entities or other reasons, are carried at fair value
with unrealized net gains or losses reported within other
comprehensive income (loss). Declines in fair value related
to credit, if any, are recorded through the establishment of
an allowance for credit losses.
Held-to-maturity Securities Debt securities for which the
Company has the positive intent and ability to hold to
maturity are reported at historical cost adjusted for
amortization of premiums and accretion of discounts.
Expected credit losses, if any, are recorded through the
establishment of an allowance for credit losses.
Securities Purchased Under Agreements to Resell and
Securities Sold Under Agreements to Repurchase
Securities purchased under agreements to resell and
securities sold under agreements to repurchase are
accounted for as collateralized financing transactions with
a receivable or payable recorded at the amounts at which
the securities were acquired or sold, plus accrued interest.
Collateral requirements are continually monitored and
additional collateral is received or provided as required.
The Company records a receivable or payable for cash
collateral paid or received.
Equity Investments
Equity investments in entities where the Company has a
significant influence (generally between 20 percent and 50
percent ownership), but does not control the entity, are
accounted for using the equity method. Investments in
limited partnerships and similarly structured limited liability
companies where the Company’s ownership interest is
greater than 5 percent are accounted for using the equity
method. Equity investments not using the equity method
are accounted for at fair value with changes in fair value
and realized gains or losses reported in noninterest
income, unless fair value is not readily determinable, in
which case the investment is carried at cost subject to
adjustments for any observable market transactions on the
same or similar instruments of the investee. Most of the
Company’s equity investments do not have readily
determinable fair values. All equity investments are
evaluated for impairment at least annually and more
frequently if certain criteria are met.
Loans
The Company offers a broad array of lending products and
categorizes its loan portfolio into two segments, which is
the level at which it develops and documents a systematic
methodology to determine the allowance for credit losses.
The Company’s two loan portfolio segments are
commercial lending and consumer lending. The Company
further disaggregates its loan portfolio segments into
various classes based on their underlying risk
characteristics. The two classes within the commercial
lending segment are commercial loans and commercial
real estate loans. The three classes within the consumer
lending segment are residential mortgages, credit card
loans and other retail loans.
Originated Loans Held for Investment Loans the
Company originates as held for investment are reported at
the principal amount outstanding, net of unearned interest
income and deferred fees and costs, and any direct
principal charge-offs. Interest income is accrued on the
unpaid principal balances as earned. Loan and
commitment fees and certain direct loan origination costs
72 U.S. Bancorp 2024 Annual Report
are deferred and recognized over the life of the loan and/or
commitment period as yield adjustments.
Purchased Loans All purchased loans are recorded at fair
value at the date of purchase and those acquired on or
after January 1, 2020 are divided into those considered
PCD and those not considered PCD. An allowance for
credit losses is established for each population and
considers product mix, risk characteristics of the portfolio,
delinquency status and refreshed loan-to-value ratios when
possible. The allowance established for purchased loans
not considered PCD is recognized through provision
expense upon acquisition, whereas the allowance
established for loans considered PCD at acquisition is
offset by an increase in the basis of the acquired loans. Any
subsequent increases and decreases in the allowance
related to purchased loans, regardless of PCD status, are
recognized through provision expense, with charge-offs
charged to the allowance.
Commitments to Extend Credit Unfunded commitments
for residential mortgage loans intended to be held for sale
are considered derivatives and recorded in other assets
and other liabilities on the Consolidated Balance Sheet at
fair value with changes in fair value recorded in noninterest
income. All other unfunded loan commitments are not
considered derivatives and are not reported on the
Consolidated Balance Sheet. Reserves for credit exposure
on all other unfunded credit commitments are recorded in
other liabilities.
Allowance for Credit Losses The allowance for credit
losses is established for current expected credit losses on
the Company’s loan and lease portfolio, including unfunded
credit commitments. The allowance considers expected
losses for the remaining lives of the applicable assets,
inclusive of expected recoveries. The allowance for credit
losses is increased through provisions charged to earnings
and reduced by net charge-offs. Management evaluates
the appropriateness of the allowance for credit losses on a
quarterly basis.
Multiple economic scenarios are considered over a
three-year reasonable and supportable forecast period,
which includes increasing consideration of historical loss
experience over years two and three. These economic
scenarios are constructed with interrelated projections of
multiple economic variables, and loss estimates are
produced that consider the historical correlation of those
economic variables with credit losses. After the forecast
period, the Company fully reverts to long-term historical
loss experience, adjusted for prepayments and
characteristics of the current loan and lease portfolio, to
estimate losses over the remaining life of the portfolio. The
economic scenarios are updated at least quarterly and are
designed to provide a range of reasonable estimates, both
better and worse than current expectations. Scenarios are
weighted based on the Company’s expectation of
economic conditions for the foreseeable future and reflect
significant judgment and consideration of economic
forecast uncertainty. Final loss estimates also consider
factors affecting credit losses not reflected in the scenarios,
due to the unique aspects of current conditions and
expectations. These factors may include, but are not limited
to, loan servicing practices, regulatory guidance, and/or
fiscal and monetary policy actions.
The allowance recorded for credit losses utilizes
forward-looking expected loss models to consider a variety
of factors affecting lifetime credit losses. These factors
include, but are not limited to, macroeconomic variables
such as unemployment rates, real estate prices, gross
domestic product levels, inflation, interest rates and
corporate bonds spreads, as well as loan and borrower
characteristics, such as internal risk ratings on commercial
loans and consumer credit scores, delinquency status,
collateral type and available valuation information,
consideration of end-of-term losses on lease residuals, and
the remaining term of the loan, adjusted for expected
prepayments. For each loan portfolio, including those loans
modified under various loan modification programs, model
estimates are adjusted as necessary to consider any
relevant changes in portfolio composition, lending policies,
underwriting standards, risk management practices,
economic conditions or other factors that would affect the
accuracy of the model. Expected credit loss estimates also
include consideration of expected cash recoveries on loans
previously charged-off or expected recoveries on collateral
dependent loans where recovery is expected through sale
of the collateral at fair value less selling costs. Where loans
do not exhibit similar risk characteristics, an individual
analysis is performed to consider expected credit losses.
For loans and leases that do not share similar risk
characteristics with a pool of loans, the Company
establishes individually assessed reserves. Reserves for
individual commercial nonperforming loans greater than $5
million in the commercial lending segment are analyzed
utilizing expected cash flows discounted using the original
effective interest rate, the observable market price of the
loan, or the fair value of the collateral, less selling costs, for
collateral-dependent loans as appropriate. For smaller
commercial loans collectively evaluated for impairment,
historical loss experience is also incorporated into the
allowance methodology applied to this category of loans.
The Company’s methodology for determining the
appropriate allowance for credit losses also considers the
imprecision inherent in the methodologies used and
allocated to the various loan portfolios. As a result, amounts
determined under the methodologies described above are
adjusted by management to consider the potential impact
of other qualitative factors not captured in the quantitative
model adjustments which include, but are not limited to, the
following: model imprecision, imprecision in economic
scenario assumptions, and emerging risks related to either
changes in the environment that are affecting specific
portfolios, or changes in portfolio concentrations over time
that may affect model performance. The consideration of
these items results in adjustments to allowance amounts
included in the Company’s allowance for credit losses for
each loan portfolio.
The Company also assesses the credit risk associated
with off-balance sheet loan commitments, letters of credit,
investment securities and derivatives. Credit risk
associated with derivatives is reflected in the fair values
73
recorded for those positions. The liability for off-balance
sheet credit exposure related to loan commitments and
other credit guarantees is included in other liabilities.
Because business processes and credit risks associated
with unfunded credit commitments are essentially the same
as for loans, the Company utilizes similar processes to
estimate its liability for unfunded credit commitments.
The results of the analysis are evaluated quarterly to
confirm the estimates are appropriate for each specific loan
portfolio, as well as the entire loan portfolio, as the entire
allowance for credit losses is available for the entire loan
portfolio.
Credit Quality The credit quality of the Company’s loan
portfolios is assessed as a function of net credit losses,
levels of nonperforming assets and delinquencies, and
credit quality ratings as defined by the Company.
For all loan portfolio classes, loans are considered
past due based on the number of days delinquent except
for monthly amortizing loans which are classified delinquent
based upon the number of contractually required payments
not made (for example, two missed payments is considered
30 days delinquent). When a loan is placed on nonaccrual
status, unpaid accrued interest is reversed, reducing
interest income in the current period.
Commercial lending segment loans are generally placed
on nonaccrual status when the collection of principal and
interest has become 90 days past due or is otherwise
considered doubtful. Commercial lending segment loans
are generally fully charged down if unsecured by collateral
or partially charged down to the fair value of the collateral
securing the loan, less costs to sell, when the loan is
placed on nonaccrual.
Consumer lending segment loans are generally
charged-off at a specific number of days or payments past
due. Residential mortgages and other retail loans secured
by 1-4 family properties are generally charged down to the
fair value of the collateral securing the loan, less costs to
sell, at 180 days past due. Residential mortgage loans and
lines in a first lien position are placed on nonaccrual status
in instances where a partial charge-off occurs unless the
loan is well secured and in the process of collection.
Residential mortgage loans and lines in a junior lien
position secured by 1-4 family properties are placed on
nonaccrual status at 120 days past due or when they are
behind a first lien that has become 180 days or greater past
due or placed on nonaccrual status. Any secured
consumer lending segment loan whose borrower has had
debt discharged through bankruptcy, for which the loan
amount exceeds the fair value of the collateral, is charged
down to the fair value of the related collateral and the
remaining balance is placed on nonaccrual status. Credit
card loans continue to accrue interest until the account is
charged-off. Credit cards are charged-off at 180 days past
due. Other retail loans not secured by 1-4 family properties
are charged-off at 120 days past due; and revolving
consumer lines are charged-off at 180 days past due.
Similar to credit cards, other retail loans are generally not
placed on nonaccrual status because of the relative short
period of time to charge-off. Certain retail customers having
financial difficulties may have the terms of their credit card
and other loan agreements modified to require only
principal payments and, as such, are reported as
nonaccrual.
For all loan classes, interest payments received on
nonaccrual loans are generally recorded as a reduction to
a loan’s carrying amount while a loan is on nonaccrual and
are recognized as interest income upon payoff of the loan.
However, interest income may be recognized for interest
payments if the remaining carrying amount of the loan is
believed to be collectible. In certain circumstances, loans
in any class may be restored to accrual status, such as
when a loan has demonstrated sustained repayment
performance or no amounts are past due and prospects for
future payment are no longer in doubt; or when the loan
becomes well secured and is in the process of collection.
Loans where there has been a partial charge-off may be
returned to accrual status if all principal and interest
(including amounts previously charged-off) is expected to
be collected and the loan is current.
The Company classifies its loan portfolio classes using
internal credit quality ratings on a quarterly basis. These
ratings include pass, special mention and classified, and
are an important part of the Company’s overall credit risk
management process and evaluation of the allowance for
credit losses. Loans with a pass rating represent those
loans not classified on the Company’s rating scale for
problem credits, as minimal credit risk has been identified.
Special mention loans are those loans that have a potential
weakness deserving management’s close attention.
Classified loans are those loans where a well-defined
weakness has been identified that may put full collection of
contractual cash flows at risk. It is possible that others,
given the same information, may reach different reasonable
conclusions regarding the credit quality rating classification
of specific loans.
Loan Modifications In certain circumstances, the
Company may modify the terms of a loan to maximize the
collection of amounts due when a borrower is experiencing
financial difficulties or is expected to experience difficulties
in the near-term. The Company recognizes interest on
modified loans if full collection of contractual principal and
interest is expected. The effects of modifications on credit
loss expectations, such as improved payment capacity,
longer expected lives and other factors, are considered
when measuring the allowance for credit losses.
Modification performance, including redefault rates and
how these compare to historical losses, are also
considered. Modifications generally do not result in
significant changes to the Company’s allowance for credit
losses.
For the commercial lending segment, modifications
generally result in the Company working with borrowers on
a case-by-case basis. Commercial and commercial real
estate modifications generally include extensions of the
maturity date and may be accompanied by an increase or
decrease to the interest rate. In addition, the Company may
work with the borrower in identifying other changes that
mitigate loss to the Company, which may include additional
collateral or guarantees to support the loan. To a lesser
74 U.S. Bancorp 2024 Annual Report
extent, the Company may provide an interest rate
reduction.
Modifications for the consumer lending segment are
generally part of programs the Company has initiated. The
Company modifies residential mortgage loans under
Federal Housing Administration, United States Department
of Veterans Affairs, or its own internal programs. Under
these programs, the Company offers qualifying
homeowners the opportunity to permanently modify their
loan and achieve more affordable monthly payments.
These modifications may include adjustments to interest
rates, conversion of adjustable rates to fixed rates,
extension of maturity dates or deferrals of payments,
capitalization of accrued interest and/or outstanding
advances, or in limited situations, partial forgiveness of loan
principal. In some instances, participation in residential
mortgage loan modification programs requires the
customer to complete a short-term trial period. A
permanent loan modification is contingent on the customer
successfully completing the trial period arrangement, and
the loan documents are not modified until that time.
Credit card and other retail loan modifications are
generally part of distinct modification programs providing
customers experiencing financial difficulty with
modifications whereby balances may be amortized up to 60
months, and generally include waiver of fees and reduced
interest rates.
Leases The Company, as a lessor, originates retail and
commercial leases either directly to the consumer or
indirectly through dealer networks. Retail leases, primarily
automobiles, have terms up to 5 years. Commercial leases
may include high dollar assets such as aircraft or lower
cost items such as office equipment. At lease inception,
retail lease customers may be provided with an end-of-term
purchase option, which is based on the contractual residual
value of the automobile at the expiration of the lease.
Automobile leases do not typically contain options to
extend or terminate the lease. Equipment leases may
contain various types of purchase options. Some option
amounts are a stated value, while others are determined
using the fair market value at the time of option exercise.
Residual values on leased assets are reviewed regularly
for impairment. Residual valuations for retail leases are
based on independent assessments of expected used
automobile sale prices at the end of the lease term.
Impairment tests are conducted based on these valuations
considering the probability of the lessee returning the asset
to the Company, re-marketing efforts, insurance coverage
and ancillary fees and costs. Valuations for commercial
leases are based upon external or internal management
appraisals. The Company manages its risk to changes in
the residual value of leased vehicles, office and business
equipment, and other assets through disciplined residual
valuation setting at the inception of a lease, diversification
of its leased assets, regular residual asset valuation reviews
and monitoring of residual value gains or losses upon the
disposition of assets. Retail lease residual value risk is
mitigated further by the purchase of residual value
insurance coverage and effective end-of-term marketing of
off-lease vehicles.
The Company, as lessee, leases certain assets for use
in its operations. Leased assets primarily include retail
branches, operations centers and other corporate
locations, and, to a lesser extent, office and computer
equipment. For each lease with an original term greater
than 12 months, the Company records a lease liability and
a corresponding right of use (“ROU”) asset. The Company
accounts for the lease and non-lease components in the
majority of its lease contracts as a single lease component,
with the determination of the lease liability at lease
inception based on the present value of the consideration
to be paid under the contract. The discount rate used by
the Company is determined at commencement of the lease
using a secured rate for a similar term as the period of the
lease. The Company’s leases do not include significant
variable lease payments.
Certain of the Company’s real estate leases include
options to extend. Lease extension options are generally
exercisable at market rates. Option periods that the
Company is reasonably certain that it will exercise are
included in the calculation of its ROU assets and lease
liabilities.
Other Real Estate OREO is included in other assets, and is
property acquired through foreclosure or other proceedings
on defaulted loans. OREO is initially recorded at fair value,
less estimated selling costs. The fair value of OREO is
evaluated regularly and any decreases in value along with
holding costs, such as taxes and insurance, are reported in
noninterest expense.
Loans Held For Sale
Loans held for sale (“LHFS”) represent mortgage loans
intended to be sold in the secondary market and other
loans that management has an active plan to sell. LHFS are
carried at the lower-of-cost-or-fair value as determined on
an aggregate basis by type of loan with the exception of
loans for which the Company has elected fair value
accounting, which are carried at fair value. Any writedowns
to fair value upon the transfer of loans to LHFS are reflected
in loan charge-offs.
Where an election is made to carry the LHFS at fair
value, any change in fair value is recognized in noninterest
income. Where an election is made to carry LHFS at lower-
of-cost-or-fair value, any further decreases are recognized
in noninterest income and increases in fair value above the
loan cost basis are not recognized until the loans are sold.
Fair value elections are made at the time of origination or
purchase based on the Company’s fair value election
policy. The Company has elected fair value accounting for
substantially all its MLHFS.
Derivative Financial Instruments
In the ordinary course of business, the Company enters into
derivative transactions to manage various risks and to
accommodate the business requirements of its customers.
Derivative instruments are reported in other assets or other
liabilities at fair value. Changes in a derivative’s fair value
are recognized currently in earnings unless specific hedge
accounting criteria are met.
75
All derivative instruments that qualify and are
designated for hedge accounting are recorded at fair value
and classified as either a hedge of the fair value of a
recognized asset or liability (“fair value hedge”); a hedge of
a forecasted transaction or the variability of cash flows to
be received or paid related to a recognized asset or liability
(“cash flow hedge”); or a hedge of the volatility of a net
investment in foreign operations driven by changes in
foreign currency exchange rates (“net investment hedge”).
Changes in the fair value of a derivative that is highly
effective and designated as a fair value hedge, and the
offsetting changes in the fair value of the hedged item, are
recorded in earnings. Changes in the fair value of a
derivative that is highly effective and designated as a cash
flow hedge are recorded in other comprehensive income
(loss) until cash flows of the hedged item are realized.
Changes in the fair value of net investment hedges that are
highly effective are recorded in other comprehensive
income (loss). The Company performs an assessment, at
inception and, at a minimum, quarterly thereafter, to
determine the effectiveness of the derivative in offsetting
changes in the value or cash flows of the hedged item(s).
If a derivative designated as a cash flow hedge is
terminated or ceases to be highly effective, the gain or loss
in other comprehensive income (loss) is amortized to
earnings over the period the forecasted hedged
transactions impact earnings. If a hedged forecasted
transaction is no longer probable, hedge accounting is
ceased and any gain or loss included in other
comprehensive income (loss) is reported in earnings
immediately, unless the forecasted transaction is at least
reasonably possible of occurring, whereby the amounts
remain within other comprehensive income (loss).
Revenue Recognition
In the ordinary course of business, the Company
recognizes income derived from various revenue
generating activities. Certain revenues are generated from
contracts where they are recognized when, or as services
or products are transferred to customers for amounts the
Company expects to be entitled. Revenue generating
activities related to financial assets and liabilities are also
recognized, including mortgage servicing fees, loan
commitment fees, foreign currency remeasurements, and
gains and losses on securities, equity investments and
unconsolidated subsidiaries. Certain specific policies
include the following:
Card Revenue Card revenue includes interchange from
credit, debit and stored-value cards processed through
card association networks, annual fees, and other
transaction and account management fees. Interchange
rates are generally set by the card associations and based
on purchase volumes and other factors. The Company
records interchange as services are provided. Transaction
and account management fees are recognized as services
are provided, except for annual fees which are recognized
over the applicable period. Costs for rewards programs
and certain payments to partners and card associations are
also recorded within card revenue when services are
provided. The Company predominately records card
revenue within the Payment Services business segment.
Corporate Payment Products Revenue Corporate
payment products revenue primarily includes interchange
from commercial card products processed through card
association networks and revenue from proprietary network
transactions. The Company records corporate payment
products revenue as services are provided. Certain
payments to card associations and customers are also
recorded within corporate payment products revenue as
services are provided. Corporate payment products
revenue is recorded within the Payment Services business
segment.
Merchant Processing Services Merchant processing
services revenue consists principally of merchant discount
and other transaction and account management fees
charged to merchants for the electronic processing of card
association network transactions, less interchange paid to
the card-issuing bank, card association assessments, and
revenue sharing amounts. All of these are recognized at the
time the merchant’s services are performed. The Company
may enter into revenue sharing agreements with referral
partners or in connection with purchases of merchant
contracts from sellers. The revenue sharing amounts are
determined primarily on sales volume processed or
revenue generated for a particular group of merchants.
Merchant processing revenue also includes revenues
related to point-of-sale equipment recorded as sales when
the equipment is shipped or as earned for equipment
rentals. The Company records merchant processing
services revenue within the Payment Services business
segment.
Trust and Investment Management Fees Trust and
investment management fees are recognized over the
period in which services are performed and are based on a
percentage of the fair value of the assets under
management or administration, fixed based on account
type, or transaction-based fees. Services provided to
clients include trustee, transfer agent, custodian, fiscal
agent, escrow, fund accounting and administration
services. Services provided to mutual funds may include
selling, distribution and marketing services. Trust and
investment management fees are predominately recorded
within the Wealth, Corporate, Commercial and Institutional
Banking business segment.
Service Charges Service charges include fees received on
deposit accounts under depository agreements with
customers to provide access to deposited funds, serve as
a custodian of funds, and when applicable, pay interest on
deposits. Checking or savings accounts may contain fees
for various services used on a day-to-day basis by a
customer. Fees are recognized as services are delivered to
and consumed by the customer, or as fees are charged.
Service charges also include revenue generated from ATM
transaction processing and settlement services which is
recognized at the time the services are performed. Certain
payments to partners and card associations related to ATM
processing services are also recorded within service
76 U.S. Bancorp 2024 Annual Report
charges as services are provided. Further, revenue
generated from treasury management services are
included in service charges and include fees for a broad
range of products and services that enable customers to
manage their cash more efficiently. These products and
services include cash and investment management,
receivables management, disbursement services, funds
transfer services, and information reporting. Treasury
management revenue is recognized as products and
services are provided to customers. The Company reflects
a discount calculated on monthly average collected
customer balances. Service charges are reported primarily
within the Wealth, Corporate, Commercial and Institutional
Banking, and Consumer and Business Banking business
segments.
Commercial Products Revenue Commercial products
revenue primarily includes revenue related to ancillary
services provided to Wealth, Corporate, Commercial and
Institutional Banking, and Consumer and Business Banking
customers, including underwriting fees, standby letter of
credit fees, non-yield related loan fees, loan and
syndication fees, and revenue recognized on customer-
related derivatives and sales of direct financing leases. The
Company charges underwriting fees when leading or
participating with a group of underwriters in raising
investment capital on behalf of securities issuers. These
fees are recognized at securities issuance. The Company,
in its role as lead underwriter, arranges deal structuring and
use of outside vendors for the underwriting group. The
Company recognizes only those fees and expenses related
to its underwriting commitment. Sales of direct financing
leases are recognized at point of sale.
Mortgage Banking Revenue Mortgage banking revenue
includes revenue derived from mortgages originated and
subsequently sold, generally with servicing retained. The
primary components include: gains and losses on
mortgage sales; servicing revenue; changes in fair value for
mortgage loans originated with the intent to sell and
measured at fair value under the fair value option; changes
in fair value for derivative commitments to purchase and
originate mortgage loans; changes in the fair value of
MSRs; and the impact of risk management activities
associated with the mortgage origination pipeline, funded
loans and MSRs. Net interest income from mortgage loans
is recorded in interest income. Refer to Other Significant
Policies in Note 1, as well as Note 9 and Note 21 for a
further discussion of MSRs. Mortgage banking revenue is
reported within the Consumer and Business Banking
business segment.
Investment Products Fees Investment products fees
include commissions related to the execution of requested
security trades, distribution fees from sale of mutual funds,
and investment advisory fees. Commissions and investment
advisory fees are recognized as services are delivered to
and utilized by the customer. Distribution fees are received
over time, are dependent on the consumer maintaining their
mutual fund asset position and the value of such position.
These revenues are estimated and recognized at the point
a significant reversal of revenue becomes remote.
Investment products fees are predominately reported within
the Wealth, Corporate, Commercial and Institutional
Banking business segment.
Other Noninterest Income Other noninterest income is
primarily related to financial assets including income on
unconsolidated subsidiaries and equity method
investments, gains on sale of other investments and
corporate owned life insurance proceeds. The Company
reports other noninterest income across all business
segments.
Other Significant Policies
Goodwill and Other Intangible Assets Goodwill is
recorded on acquired businesses if the purchase price
exceeds the fair value of the net assets acquired. Goodwill
is not amortized but is subject, at a minimum, to annual
tests for impairment at a reporting unit level. In certain
situations, an interim impairment test may be required if
events occur or circumstances change that would more
likely than not reduce the fair value of a reporting unit below
its carrying amount. Determining the amount of goodwill
impairment, if any, includes assessing whether the carrying
value of a reporting unit exceeds its fair value. Other
intangible assets are recorded at their fair value upon
completion of a business acquisition or certain other
transactions, and include core deposits benefits and the
value of customer contracts or relationships. Other
intangible assets are amortized over their estimated useful
lives, using straight-line and accelerated methods and are
reviewed for impairment when indicators of impairment are
present. Determining the amount of other intangible asset
impairment, if any, includes assessing the present value of
the estimated future cash flows associated with the
intangible asset and comparing it to the carrying amount of
the asset.
Income Taxes Deferred taxes are recorded to reflect the
tax consequences on future years of differences between
the tax basis of assets and liabilities and their financial
reporting carrying amounts. The Company uses the deferral
method of accounting on investments that generate
investment tax credits. Under this method, the investment
tax credits are recognized as a reduction to the related
asset. For investments in qualified affordable housing
projects and certain other tax-advantaged investments, the
Company presents the expense in tax expense rather than
noninterest expense.
Mortgage Servicing Rights MSRs are capitalized as
separate assets when loans are sold and servicing is
retained or if they are purchased from others. MSRs are
recorded at fair value. The Company determines the fair
value by estimating the present value of the asset’s future
cash flows utilizing market-based prepayment rates, option
adjusted spread, and other assumptions validated through
comparison to trade information, industry surveys and
independent third-party valuations. Changes in the fair
value of MSRs are recorded in earnings as mortgage
banking revenue during the period in which they occur.
77
Pensions For purposes of its pension plans, the Company
utilizes its fiscal year-end as the measurement date. At the
measurement date, plan assets are determined based on
fair value, generally representing observable market prices
or the net asset value provided by the funds’ trustee or
administrator. The actuarial cost method used to compute
the pension liabilities and related expense is the projected
unit credit method. The projected benefit obligation is
principally determined based on the present value of
projected benefit distributions at an assumed discount rate.
The discount rate utilized is based on the investment yield
of high quality corporate bonds available in the
marketplace with maturities equal to projected cash flows
of future benefit payments as of the measurement date.
Periodic pension expense (or income) includes service
costs, interest costs based on the assumed discount rate,
the expected return on plan assets based on an actuarially
derived market-related value and amortization of actuarial
gains and losses. Service cost is included in compensation
and employee benefits expense on the Consolidated
Statement of Income, with all other components of periodic
pension expense included in other noninterest expense on
the Consolidated Statement of Income.
Pension accounting reflects the long-term nature of
benefit obligations and the investment horizon of plan
assets, and can have the effect of reducing earnings
volatility related to short-term changes in interest rates and
market valuations. Actuarial gains and losses include the
impact of plan amendments and various unrecognized
gains and losses which are deferred, and to the extent
exceed 10 percent of the greater of the projected benefit
obligation or the market-related value of plan assets, are
amortized over the future service periods of active
employees or the remaining life expectancies of inactive
participants. The market-related value utilized to determine
the expected return on plan assets is based on fair value
adjusted for the difference between expected returns and
actual performance of plan assets. The unrealized
difference between actual experience and expected
returns is included in expense over a period of
approximately 15 years for active employees and
approximately 30 years for inactive participants. The
overfunded or underfunded status of each plan is recorded
as an asset or liability on the Consolidated Balance Sheet,
with changes in that status recognized through other
comprehensive income (loss).
Premises and Equipment Premises and equipment are
stated at cost less accumulated depreciation and
depreciated primarily on a straight-line basis over the
estimated life of the assets. Estimated useful lives range up
to 40 years for newly constructed buildings and from 3 to
25 years for furniture and equipment.
The Company, as lessee, records an ROU asset for
each lease with an original term greater than 12 months.
ROU assets are included in premises and equipment, with
the corresponding lease liabilities included in long-term
debt and other liabilities.
Capitalized Software The Company capitalizes certain
costs associated with the acquisition or development of
internal-use software. Once the software is ready for its
intended use, these costs are amortized on a straight-line
basis over the software’s expected useful life and reviewed
for impairment on an ongoing basis. Estimated useful lives
are generally 3 to 5 years, but may range up to 7 years.
Stock-Based Compensation The Company grants stock-
based awards, which may include restricted stock,
restricted stock units and options to purchase common
stock of the Company. Stock option grants are for a fixed
number of shares to employees and directors with an
exercise price equal to the fair value of the shares at the
date of grant. Restricted stock and restricted stock unit
grants are awarded at no cost to the recipient. Stock-based
compensation for awards is recognized in the Company’s
results of operations over the vesting period. The Company
immediately recognizes compensation cost of awards to
employees that meet retirement status, despite their
continued active employment. The amortization of stock-
based compensation reflects estimated forfeitures adjusted
for actual forfeiture experience. As compensation expense
is recognized, a deferred tax asset is recorded that
represents an estimate of the future tax deduction from
exercise or release of restrictions. At the time stock-based
awards are exercised, cancelled, expire, or restrictions are
released, the Company may be required to recognize an
adjustment to tax expense, depending on the market price
of the Company’s common stock at that time.
Per Share Calculations Earnings per common share is
calculated using the two-class method under which
earnings are allocated to common shareholders and
holders of participating securities. Unvested stock-based
compensation awards that contain nonforfeitable rights to
dividends or dividend equivalents are considered
participating securities under the two-class method. Net
income applicable to U.S. Bancorp common shareholders
is then divided by the weighted-average number of
common shares outstanding to determine earnings per
common share. Diluted earnings per common share is
calculated by adjusting income and outstanding shares,
assuming conversion of all potentially dilutive securities.
NOTE 2 Accounting Changes
Reference Interest Rate Transition In March 2020, the
Financial Accounting Standards Board (“FASB”) issued
accounting guidance to ease the financial reporting
burdens related to the market transition from the London
Interbank Offered Rate (“LIBOR”) and other interbank
offered rates to alternative reference rates. The guidance
provided temporary optional expedients and exceptions to
the guidance in United States generally accepted
accounting principles on contract modifications and hedge
accounting. The guidance was effective upon issuance and
generally could be applied through December 31, 2024.
The adoption of this guidance was not material to the
Company's financial statements.
78 U.S. Bancorp 2024 Annual Report
Income Taxes – Improvements to Income Tax
Disclosures In December 2023, the FASB issued
guidance, effective for the Company for annual reporting
periods beginning after December 15, 2024, related to
income tax disclosures. This guidance requires additional
information in income tax rate reconciliation disclosures
and additional disclosures about income taxes paid. The
guidance is required, at a minimum, to be adopted on a
prospective basis, with an option to apply it retrospectively.
The Company expects the adoption of this guidance will
not be material to its financial statements.
Segment Reporting – Improvements to Reportable
Segment Disclosures Effective with the 2024 annual
reporting period, the Company adopted accounting
guidance on a retrospective basis, issued by the FASB in
November 2023, related to segment disclosures. This
guidance requires disclosures of significant segment
expenses and other segment items and expands interim
period disclosure requirements to include segment profit or
loss and assets, which were previously only required to be
disclosed annually. The adoption of this guidance was not
material to the Company's financial statements.
NOTE 3 Restrictions on Cash and Due
from Banks
Banking regulators require bank subsidiaries to maintain
minimum average reserve balances, either in the form of
vault cash or reserve balances held with central banks or
other financial institutions. The amount of required reserve
balances were approximately $53 million at both
December 31, 2024 and 2023. The Company held
balances at central banks and other financial institutions of
$48.4 billion and $49.5 billion at December 31, 2024 and
2023, respectively, to meet these requirements and for
other purposes. These balances are included in cash and
due from banks on the Consolidated Balance Sheet.
79
NOTE 4 Investment Securities
The Company’s held-to-maturity investment securities are
value with unrealized net gains or losses reported within
carried at historical cost, adjusted for amortization of
accumulated other comprehensive income (loss) in
premiums and accretion of discounts. The Company’s
shareholders’ equity.
available-for-sale investment securities are carried at fair
The amortized cost, gross unrealized holding gains and losses, and fair value of held-to-maturity and available-for-sale
investment securities at December 31 were as follows:
2024
2023
Amortized Unrealized Unrealized
Amortized Unrealized Unrealized
(Dollars in Millions)
Cost
Gains
Losses
Fair Value
Cost
Gains
Losses
Fair Value
Held-to-Maturity
U.S. Treasury and agencies
$ 1,296 $
— $
(21) $
1,275 $ 1,345 $
— $
(35) $
1,310
Mortgage-backed securities
Residential agency
75,392
3
(12,317)
63,078
80,997
6
(9,929)
71,074
Commercial agency
1,702
—
(27)
1,675
1,695
6
(5)
1,696
Other
244
3
—
247
8
—
—
8
Total held-to-maturity
$ 78,634 $
6 $(12,365) $ 66,275 $ 84,045 $
12 $ (9,969) $ 74,088
Available-for-Sale
U.S. Treasury and agencies
$ 30,467 $
1 $ (2,081) $ 28,387 $ 21,768 $
8 $ (2,234) $ 19,542
Mortgage-backed securities
Residential agency
35,558
13
(2,290)
33,281
28,185
104
(2,211)
26,078
Commercial
Agency
8,673
—
(1,322)
7,351
8,703
—
(1,360)
7,343
Non-agency
7
—
(1)
6
7
—
(1)
6
Asset-backed securities
7,136
30
(1)
7,165
6,713
25
(14)
6,724
Obligations of state and political subdivisions
10,690
13
(1,151)
9,552
10,867
36
(914)
9,989
Other
249
1
—
250
24
—
—
24
Total available-for-sale, excluding portfolio level
basis adjustments
92,780
58
(6,846)
85,992
76,267
173
(6,734)
69,706
Portfolio level basis adjustments (a)
13
—
(13)
—
335
—
(335)
—
Total available-for-sale
$ 92,793 $
58 $ (6,859) $ 85,992 $ 76,602 $
173 $ (7,069) $ 69,706
(a) Represents fair value hedge basis adjustments related to active portfolio layer method hedges of available-for-sale investment securities, which are not allocated to individual
securities in the portfolio. For additional information, refer to Note 19.
Investment securities with a fair value of $18.8 billion at
counterparties have agreements granting the
December 31, 2024, and $20.5 billion at December 31,
counterparties the right to sell or pledge the securities.
2023, were pledged to secure public, private and trust
Investment securities securing these types of arrangements
deposits, repurchase agreements and for other purposes
had a fair value of $320 million at December 31, 2024, and
required by contractual obligation or law. Included in these
$338 million at December 31, 2023.
amounts were securities where the Company and certain
The following table provides information about the amount of interest income from taxable and non-taxable investment securities:
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Taxable
$
4,808 $
4,171 $
3,081
Non-taxable
303
314
297
Total interest income from investment securities
$
5,111 $
4,485 $
3,378
80 U.S. Bancorp 2024 Annual Report
The following table provides information about the amount of gross gains and losses realized through the sales of available-for-
sale investment securities:
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Realized gains
$
147 $
74 $
163
Realized losses
(301)
(219)
(143)
Net realized gains (losses)
$
(154) $
(145) $
20
Income tax expense (benefit) on net realized gains (losses)
$
(39) $
(37) $
5
The Company conducts a regular assessment of its
collateral, the existence of any government or agency
available-for-sale investment securities with unrealized
guarantees, and market conditions. The Company
losses to determine whether all or some portion of a
measures the allowance for credit losses using market
security’s unrealized loss is related to credit and an
information where available and discounting the cash flows
allowance for credit losses is necessary. If the Company
at the original effective rate of the investment security. The
intends to sell or it is more likely than not the Company will
allowance for credit losses is adjusted each period through
be required to sell an investment security, the amortized
earnings and can be subsequently recovered. The
cost of the security is written down to fair value. When
allowance for credit losses on the Company’s available-for-
evaluating credit losses, the Company considers various
sale investment securities was immaterial at December 31,
factors such as the nature of the investment security, the
2024 and December 31, 2023.
credit ratings or financial condition of the issuer, the extent
of the unrealized loss, expected cash flows of underlying
At December 31, 2024, certain investment securities had a fair value below amortized cost. The following table shows the gross
unrealized losses excluding portfolio level basis adjustments and fair value of the Company’s available-for-sale investment
securities with unrealized losses, aggregated by investment category and length of time the individual investment securities have
been in continuous unrealized loss positions, at December 31, 2024:
Less Than 12 Months
12 Months or Greater
Total
(Dollars in Millions)
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. Treasury and agencies
$
9,236 $
(28) $
16,978 $
(2,053) $
26,214 $
(2,081)
Mortgage-backed securities
Residential agency
15,369
(275)
15,738
(2,015)
31,107
(2,290)
Commercial
Agency
—
—
7,351
(1,322)
7,351
(1,322)
Non-agency
—
—
7
(1)
7
(1)
Asset-backed securities
35
—
1,164
(1)
1,199
(1)
Obligations of state and political subdivisions
1,697
(21)
7,435
(1,130)
9,132
(1,151)
Other
2
—
4
—
6
—
Total investment securities
$
26,339 $
(324) $
48,677 $
(6,522) $
75,016 $
(6,846)
These unrealized losses primarily relate to changes in
interest rates and market spreads subsequent to purchase
of these available-for-sale investment securities. U.S.
Treasury and agencies securities and agency mortgage-
backed securities are issued, guaranteed or otherwise
supported by the United States government. The
Company’s obligations of state and political subdivisions
are generally high grade. Accordingly, the Company does
not consider these unrealized losses to be credit-related
and an allowance for credit losses is not necessary. In
general, the issuers of the investment securities are
contractually prohibited from prepayment at less than par,
and the Company did not pay significant purchase
premiums for these investment securities. At December 31,
2024, the Company had no plans to sell investment
securities with unrealized losses, and believes it is more
likely than not it would not be required to sell such
investment securities before recovery of their amortized
cost.
During the years ended December 31, 2024 and 2023,
the Company did not purchase any investment securities
that had more-than-insignificant credit deterioration.
Predominantly all of the Company’s held-to-maturity
investment securities are U.S. Treasury and agencies
securities and highly rated agency mortgage-backed
securities that are guaranteed or otherwise supported by
the United States government and have no history of credit
losses. Accordingly the Company does not expect to incur
any credit losses on held-to-maturity investment securities
and has no allowance for credit losses recorded for these
securities.
81
The following table provides information about the amortized cost, fair value and yield by maturity date of the investment
securities outstanding at December 31, 2024:
Weighted-
Average
Weighted-
Amortized
Maturity in
Average
(Dollars in Millions)
Cost
Fair Value
Years
Yield(e)
Held-to-Maturity
U.S. Treasury and agencies
Maturing in one year or less
$
650 $
647
0.4
2.71 %
Maturing after one year through five years
646
628
2.3
3.00
Maturing after five years through ten years
—
—
—
—
Maturing after ten years
—
—
—
—
Total
$
1,296 $
1,275
1.3
2.85 %
Mortgage-backed securities(a)
Maturing in one year or less
$
42 $
41
0.8
4.52 %
Maturing after one year through five years
2,110
2,091
3.5
4.49
Maturing after five years through ten years
73,667
61,626
9.0
2.12
Maturing after ten years
1,275
995
10.1
2.18
Total
$
77,094 $
64,753
8.8
2.19 %
Other
Maturing in one year or less
$
19 $
16
0.2
3.24 %
Maturing after one year through five years
225
231
2.4
2.68
Maturing after five years through ten years
—
—
—
—
Maturing after ten years
—
—
—
—
Total
$
244 $
247
2.2
2.73 %
Total held-to-maturity(b)
$
78,634 $
66,275
8.7
2.20 %
Available-for-Sale
U.S. Treasury and agencies
Maturing in one year or less
$
11 $
11
0.1
4.64 %
Maturing after one year through five years
14,070
13,335
3.2
2.63
Maturing after five years through ten years
15,629
14,476
6.5
3.35
Maturing after ten years
757
565
10.6
1.92
Total
$
30,467 $
28,387
5.1
2.98 %
Mortgage-backed securities(a)
Maturing in one year or less
$
30 $
29
0.6
2.02 %
Maturing after one year through five years
6,028
5,611
3.9
2.87
Maturing after five years through ten years
37,699
34,560
7.9
3.96
Maturing after ten years
481
438
11.0
4.76
Total
$
44,238 $
40,638
7.4
3.82 %
Asset-backed securities (a)
Maturing in one year or less
$
— $
—
—
— %
Maturing after one year through five years
3,668
3,684
1.7
4.90
Maturing after five years through ten years
3,468
3,481
5.9
6.26
Maturing after ten years
—
—
—
—
Total
$
7,136 $
7,165
3.8
5.56 %
Obligations of state and political subdivisions(c)(d)
Maturing in one year or less
$
128 $
128
0.4
5.53 %
Maturing after one year through five years
1,698
1,687
2.5
4.67
Maturing after five years through ten years
1,563
1,474
7.2
3.69
Maturing after ten years
7,301
6,263
14.9
3.47
Total
$
10,690 $
9,552
11.7
3.72 %
Other
Maturing in one year or less
$
49 $
49
0.7
4.66 %
Maturing after one year through five years
200
201
1.7
4.82
Maturing after five years through ten years
—
—
—
—
Maturing after ten years
—
—
—
—
Total
$
249 $
250
1.5
4.79 %
Total available-for-sale(b)(f)
$
92,780 $
85,992
6.8
3.67 %
(a) Information related to asset and mortgage-backed securities included above is presented based upon weighted-average maturities that take into account anticipated future
prepayments.
(b) The weighted-average maturity of total held-to-maturity investment securities was 8.7 years at December 31, 2023, with a corresponding weighted-average yield of 2.22 percent.
The weighted-average maturity of total available-for-sale investment securities was 6.3 years at December 31, 2023, with a corresponding weighted-average yield of 3.12 percent.
(c) Information related to obligations of state and political subdivisions is presented based upon yield to first optional call date if the security is purchased at a premium, and yield to
maturity if the security is purchased at par or a discount.
(d) Maturity calculations for obligations of state and political subdivisions are based on the first optional call date for securities with a fair value above par and the contractual maturity
date for securities with a fair value equal to or below par.
(e) Weighted-average yields for obligations of state and political subdivisions are presented on a fully-taxable equivalent basis based on a federal income tax rate of 21 percent. Yields
on investment securities are computed based on amortized cost balances, excluding any premiums or discounts recorded related to the transfer of investment securities at fair
value from available-for-sale to held-to maturity.
(f) Amortized cost excludes portfolio level basis adjustments of $13 million.
82 U.S. Bancorp 2024 Annual Report
NOTE 5 Loans and Allowance for Credit Losses
The composition of the loan portfolio at December 31, by class and underlying specific portfolio type, was as follows:
(Dollars in Millions)
2024
2023
Commercial
Commercial
$ 135,254 $ 127,676
Lease financing
4,230
4,205
Total commercial
139,484
131,881
Commercial Real Estate
Commercial mortgages
38,619
41,934
Construction and development
10,240
11,521
Total commercial real estate
48,859
53,455
Residential Mortgages
Residential mortgages
112,806
108,605
Home equity loans, first liens
6,007
6,925
Total residential mortgages
118,813
115,530
Credit Card
30,350
28,560
Other Retail
Retail leasing
4,040
4,135
Home equity and second mortgages
13,565
13,056
Revolving credit
3,747
3,668
Installment
14,373
13,889
Automobile
6,601
9,661
Total other retail
42,326
44,409
Total loans
$ 379,832 $ 373,835
The Company had loans of $127.6 billion at
December 31, 2024, and $123.1 billion at December 31,
2023, pledged at the Federal Home Loan Bank, and loans
of $85.1 billion at December 31, 2024, and $82.8 billion at
December 31, 2023, pledged at the Federal Reserve Bank.
The Company offers a broad array of lending products
to consumer and commercial customers, in various
industries, across several geographical locations,
predominately in the states in which it has Consumer and
Business Banking offices. Collateral for commercial and
commercial real estate loans may include marketable
securities, accounts receivable, inventory, equipment, real
estate, or the related property.
Originated loans are reported at the principal amount
outstanding, net of unearned interest and deferred fees and
costs, and any partial charge-offs recorded. Purchased
loans are recorded at fair value at the date of purchase. Net
unearned interest and deferred fees and costs on
originated loans and unamortized premiums and discounts
on purchased loans amounted to $2.5 billion at
December 31, 2024 and $2.7 billion at December 31, 2023.
The Company evaluates purchased loans for more-than-
insignificant deterioration at the date of purchase in
accordance with applicable authoritative accounting
guidance. Purchased loans that have experienced more-
than-insignificant deterioration from origination are
considered purchased credit deteriorated loans. All other
purchased loans are considered non-purchased credit
deteriorated loans.
Allowance for Credit Losses The allowance for credit
losses is established for current expected credit losses on
the Company’s loan and lease portfolio, including unfunded
credit commitments. The allowance considers expected
losses for the remaining lives of the applicable assets,
inclusive of expected recoveries. The allowance for credit
losses is increased through provisions charged to earnings
and reduced by net charge-offs.
83
Activity in the allowance for credit losses by portfolio class was as follows:
Commercial
Residential
Credit
Other
Total
(Dollars in Millions)
Commercial
Real Estate
Mortgages
Card
Retail
Loans
Balance at December 31, 2023
$
2,119 $
1,620 $
827 $
2,403 $
870 $
7,839
Add
Provision for credit losses
608
53
(53)
1,464
166
2,238
Deduct
Loans charged-off
652
229
13
1,406
313
2,613
Less recoveries of loans charged-off
(100)
(64)
(22)
(179)
(96)
(461)
Net loan charge-offs (recoveries)
552
165
(9)
1,227
217
2,152
Balance at December 31, 2024
$
2,175 $
1,508 $
783 $
2,640 $
819 $
7,925
Balance at December 31, 2022
$
2,163 $
1,325 $
926 $
2,020 $
970 $
7,404
Add
Change in accounting principle(a)
—
—
(31)
(27)
(4)
(62)
Allowance for acquired credit losses(b)
—
127
—
—
—
127
Provision for credit losses
270
431
41
1,259
274
2,275
Deduct
Loans charged-off
389
281
129
1,014
478
2,291
Less recoveries of loans charged-off
(75)
(18)
(20)
(165)
(108)
(386)
Net loan charge-offs (recoveries)
314
263
109
849
370
1,905
Balance at December 31, 2023
$
2,119 $
1,620 $
827 $
2,403 $
870 $
7,839
Balance at December 31, 2021
$
1,849 $
1,123 $
565 $
1,673 $
945 $
6,155
Add
Allowance for acquired credit losses(b)
163
87
36
45
5
336
Provision for credit losses(c)
378
152
302
826
319
1,977
Deduct
Loans charged-off(d)
319
54
13
696
418
1,500
Less recoveries of loans charged-off
(92)
(17)
(36)
(172)
(120)
(437)
Net loan charge-offs (recoveries)
227
37
(23)
524
298
1,063
Other Changes
—
—
—
—
(1)
(1)
Balance at December 31, 2022
$
2,163 $
1,325 $
926 $
2,020 $
970 $
7,404
(a) Effective January 1, 2023, the Company adopted accounting guidance which removed the separate recognition and measurement of troubled debt restructurings.
(b) Represents allowance for credit deteriorated and charged-off loans acquired from MUB.
(c) Includes $662 million of provision for credit losses related to the acquisition of MUB.
(d) Includes $179 million of total charge-offs primarily on loans previously charged-off by MUB, which were written up upon acquisition to unpaid principal balance as required by
purchase accounting.
The increase in the allowance for credit losses from December 31, 2023 to December 31, 2024 was primarily driven by loan
portfolio growth.
84 U.S. Bancorp 2024 Annual Report
The following table provides a summary of loans charged-off by portfolio class and year of origination for the years ended
December 31:
Commercial
Residential
(Dollars in Millions)
Commercial
Real Estate(a)
Mortgages(b) Credit Card(c)
Other Retail(d)
Total Loans
2024
Originated in 2024
$
30 $
117 $
— $
— $
13 $
160
Originated in 2023
84
51
—
—
47
182
Originated in 2022
178
55
3
—
52
288
Originated in 2021
32
1
—
—
40
73
Originated in 2020
12
1
—
—
21
34
Originated prior to 2020
41
4
10
—
35
90
Revolving
275
—
—
1,406
105
1,786
Total charge-offs
$
652 $
229 $
13 $
1,406 $
313 $
2,613
2023
Originated in 2023
$
48 $
63 $
— $
— $
57 $
168
Originated in 2022
63
88
1
—
130
282
Originated in 2021
30
69
6
—
83
188
Originated in 2020
17
2
8
—
38
65
Originated in 2019
15
3
16
—
31
65
Originated prior to 2019
53
56
98
—
31
238
Revolving
163
—
—
1,014
80
1,257
Revolving converted to term
—
—
—
—
28
28
Total charge-offs
$
389 $
281 $
129 $
1,014 $
478 $
2,291
Note: Year of origination is based on the origination date of a loan, or for existing loans the date when the maturity date, pricing or commitment amount is amended. Predominantly all
current year and near term loan origination years for gross charge-offs relate to existing loans that have had recent maturity date, pricing or commitment amount amendments.
(a) Includes $91 million of 2023 charge-offs related to uncollectible amounts on acquired loans.
(b) Includes $117 million of 2023 charge-offs related to balance sheet repositioning and capital management actions.
(c) Predominantly all credit card loans are considered revolving loans. Includes an immaterial amount of charge-offs related to revolving converted to term loans.
(d) Includes $192 million of 2023 charge-offs related to balance sheet repositioning and capital management actions.
85
Credit Quality The credit quality of the Company’s loan portfolios is assessed as a function of net credit losses, levels of
nonperforming assets and delinquencies, and credit quality ratings as defined by the Company. These credit quality ratings are
an important part of the Company’s overall credit risk management process and evaluation of the allowance for credit losses.
The following table provides a summary of loans by portfolio class, including the delinquency status of those that continue to
accrue interest, and those that are nonperforming:
Accruing
30-89 Days
90 Days or
(Dollars in Millions)
Current
Past Due
More Past Due Nonperforming(b)
Total
December 31, 2024
Commercial
$
138,362 $
356 $
96 $
670 $
139,484
Commercial real estate
47,948
78
9
824
48,859
Residential mortgages(a)
118,267
188
206
152
118,813
Credit card
29,487
428
435
—
30,350
Other retail
41,886
229
64
147
42,326
Total loans
$
375,950 $
1,279 $
810 $
1,793 $
379,832
December 31, 2023
Commercial
$
130,925 $
464 $
116 $
376 $
131,881
Commercial real estate
Residential mortgages(a)
Credit card
52,619
115,067
27,779
55
169
406
4
136
375
777
158
—
53,455
115,530
28,560
Other retail
43,926
278
67
138
44,409
Total loans
$
370,316 $
1,372 $
698 $
1,449 $
373,835
(a) At December 31, 2024, $660 million of loans 30–89 days past due and $2.3 billion of loans 90 days or more past due purchased and that could be purchased from GNMA
mortgage pools under delinquent loan repurchase options whose repayments are insured by the Federal Housing Administration or guaranteed by the United States Department of
Veterans Affairs, were classified as current, compared with $595 million and $2.0 billion at December 31, 2023, respectively.
(b) Substantially all nonperforming loans at December 31, 2024 and 2023, had an associated allowance for credit losses. The Company recognized interest income on nonperforming
loans of $29 million and $22 million for the years ended December 31, 2024 and 2023, respectively, compared to what would have been recognized at the original contractual
terms of the loans of $66 million and $49 million, respectively.
At December 31, 2024, total nonperforming assets held
by the Company were $1.8 billion, compared with $1.5
billion at December 31, 2023. Total nonperforming assets
included $1.8 billion of nonperforming loans, $21 million of
OREO and $18 million of other nonperforming assets
owned by the Company at December 31, 2024, compared
with $1.4 billion, $26 million and $19 million, respectively, at
December 31, 2023.
At December 31, 2024, the amount of foreclosed
residential real estate held by the Company, and included
in OREO, was $21 million, compared with $26 million at
December 31, 2023. These amounts excluded $46 million
and $47 million at December 31, 2024 and December 31,
2023, respectively, of foreclosed residential real estate
related to mortgage loans whose payments are primarily
insured by the Federal Housing Administration or
guaranteed by the United States Department of Veterans
Affairs. In addition, the amount of residential mortgage
loans secured by residential real estate in the process of
foreclosure at December 31, 2024 and December 31, 2023,
was $576 million and $728 million, respectively, of which
$354 million and $487 million, respectively, related to loans
purchased and that could be purchased from GNMA
mortgage pools under delinquent loan repurchase options
whose repayments are insured by the Federal Housing
Administration or guaranteed by the United States
Department of Veterans Affairs.
86 U.S. Bancorp 2024 Annual Report
The following table provides a summary of loans by portfolio class and the Company’s internal credit quality rating:
December 31, 2024
December 31, 2023
Criticized
Criticized
Special
Total
Special
Total
(Dollars in Millions)
Pass
Mention Classified(a)
Criticized
Total
Pass
Mention Classified(a)
Criticized
Total
Commercial
Originated in 2024
$ 57,578 $
503 $
1,034 $ 1,537 $ 59,115
Originated in 2023
19,128
173
564
737
19,865
Originated in 2022
19,718
231
370
601
20,319
Originated in 2021
4,677
60
92
152
4,829
Originated in 2020
2,737
68
68
136
2,873
Originated prior to 2020
4,075
8
75
83
4,158
Revolving(b)
27,344
169
812
981
28,325
Total commercial
135,257
1,212
3,015
4,227
139,484
Commercial real estate
Originated in 2024
9,652
261
1,772
2,033
11,685
Originated in 2023
5,213
42
760
802
6,015
Originated in 2022
9,047
661
913
1,574
10,621
Originated in 2021
6,515
100
196
296
6,811
Originated in 2020
2,954
29
137
166
3,120
Originated prior to 2020
7,868
119
471
590
8,458
Revolving
2,078
—
68
68
2,146
Revolving converted to term
3
—
—
—
3
Total commercial real estate
43,330
1,212
4,317
5,529
48,859
Residential mortgages(c)
Originated in 2024
10,291
—
—
—
10,291
Originated in 2023
8,764
—
11
11
8,775
Originated in 2022
28,484
—
43
43
28,527
Originated in 2021
34,694
—
35
35
34,729
Originated in 2020
13,748
—
16
16
13,764
Originated prior to 2020
22,463
—
264
264
22,727
Revolving
—
—
—
—
—
Total residential mortgages
118,444
—
369
369
118,813
Credit card(d)
29,915
—
435
435
30,350
Other retail
Originated in 2024
7,398
—
3
3
7,401
Originated in 2023
3,966
—
9
9
3,975
Originated in 2022
4,085
—
11
11
4,096
Originated in 2021
6,537
—
14
14
6,551
Originated in 2020
2,715
—
6
6
2,721
Originated prior to 2020
2,828
—
15
15
2,843
Revolving
13,846
—
120
120
13,966
Revolving converted to term
731
—
42
42
773
Total other retail
42,106
—
220
220
42,326
Total loans
$ 369,052 $ 2,424 $
8,356 $ 10,780 $ 379,832
Total outstanding
commitments
$ 778,155 $ 3,875 $ 10,441 $ 14,316 $ 792,471
$
— $
— $
— $
— $
—
43,023
827
856
1,683
44,706
40,076
274
632
906
40,982
9,219
117
154
271
9,490
3,169
92
71
163
3,332
5,303
30
209
239
5,542
26,213
362
1,254
1,616
27,829
127,003
1,702
3,176
4,878
131,881
—
—
—
—
—
8,848
465
2,206
2,671
11,519
11,831
382
1,141
1,523
13,354
9,235
500
385
885
10,120
3,797
51
87
138
3,935
10,759
458
619
1,077
11,836
2,613
6
70
76
2,689
2
—
—
—
2
47,085
1,862
4,508
6,370
53,455
—
—
—
—
—
9,734
—
5
5
9,739
29,146
—
17
17
29,163
36,365
—
16
16
36,381
14,773
—
9
9
14,782
25,202
—
262
262
25,464
1
—
—
—
1
115,221
—
309
309
115,530
28,185
—
375
375
28,560
—
—
—
—
—
5,184
—
4
4
5,188
5,607
—
12
12
5,619
10,398
—
15
15
10,413
4,541
—
9
9
4,550
4,008
—
20
20
4,028
13,720
—
104
104
13,824
735
—
52
52
787
44,193
—
216
216
44,409
$361,687 $ 3,564 $
8,584 $ 12,148 $ 373,835
$762,869 $ 5,053 $ 10,470 $ 15,523 $ 778,392
Note: Year of origination is based on the origination date of a loan, or for existing loans the date when the maturity date, pricing or commitment amount is amended. Predominantly all
current year and nearer term loan origination years for criticized loans relate to existing loans that have had recent maturity date, pricing or commitment amount amendments.
(a) Classified rating on consumer loans primarily based on delinquency status.
(b) Includes an immaterial amount of revolving converted to term loans.
(c) At December 31, 2024, $2.3 billion of GNMA loans 90 days or more past due and $1.4 billion of modified GNMA loans whose repayments are insured by the Federal Housing
Administration or guaranteed by the United States Department of Veterans Affairs were classified with a pass rating, compared with $2.0 billion and $1.2 billion at December 31,
2023, respectively.
(d) Predominately all credit card loans are considered revolving loans. Includes an immaterial amount of revolving converted to term loans.
87
Loan Modifications In certain circumstances, the Company may modify the terms of a loan to maximize the collection of
amounts due when a borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term. The
following table provides a summary of period-end balances of loans modified during the periods presented, by portfolio class
and modification granted:
Interest Rate
Multiple
Total
Percent of
Year Ended December 31 (Dollars in Millions)
Reduction Payment Delay Term Extension Modifications(a)
Modifications
Class Total
2024
Commercial
$
77 $
2 $
526 $
— $
605
.4 %
Commercial real estate
43
—
1,107
70
1,220
2.5
Residential mortgages(b)
—
79
17
23
119
.1
Credit card
414
11
—
—
425
1.4
Other retail
7
3
125
4
139
.3
Total loans, excluding loans purchased from
GNMA mortgage pools
Loans purchased from GNMA mortgage pools(b)
541
1
95
1,215
1,775
292
97
407
2,508
1,915
.7
1.6
Total loans
$
542 $
1,310 $
2,067 $
504 $
4,423
1.2 %
2023
Commercial
$
46 $
— $
286 $
33 $
365
.3 %
Commercial real estate
—
—
645
72
717
1.3
Residential mortgages(b)
—
234
26
20
280
.2
Credit card
349
1
—
—
350
1.2
Other retail
7
21
144
3
175
.4
Total loans, excluding loans purchased from
GNMA mortgage pools
Loans purchased from GNMA mortgage pools(b)
402
—
256
1,263
1,101
255
128
321
1,887
1,839
.5
1.6
Total loans
$
402 $
1,519 $
1,356 $
449 $
3,726
1.0 %
(a) Includes $310 million of total loans receiving a payment delay and term extension, $155 million of total loans receiving an interest rate reduction and term extension and $39 million
of total loans receiving an interest rate reduction, payment delay and term extension for the year ended December 31, 2024, compared with $329 million, $112 million and $8 million
for the year ended December 31, 2023, respectively.
(b) Percent of class total amounts expressed as a percent of total residential mortgage loan balances.
Loan modifications included in the table above exclude
December 31, 2024, the balance of loans modified in trial
trial period arrangements offered to customers and secured
period arrangements was $189 million, while the balance of
loans to consumer borrowers that have had debt
secured loans to consumer borrowers that have had debt
discharged through bankruptcy where the borrower has not
discharged through bankruptcy was not material.
reaffirmed the debt during the periods presented. At
88 U.S. Bancorp 2024 Annual Report
The following table summarizes the effects of loan modifications made to borrowers on loans modified:
Weighted-Average Weighted-Average
Interest Rate
Months of Term
Year Ended December 31
Reduction
Extension
2024
Commercial(a)
20.3 %
11
Commercial real estate
3.2
13
Residential mortgages
1.1
90
Credit card
16.4
—
Other retail
7.7
5
Loans purchased from GNMA mortgage pools
.6
110
2023
Commercial(a)
13.0
12
Commercial real estate
3.5
11
Residential mortgages
1.2
98
Credit card
15.4
—
Other retail
7.9
4
Loans purchased from GNMA mortgage pools
.6
103
Note: The weighted-average payment deferral for all portfolio classes was less than $1 million for the years ended December 31, 2024 and 2023. Forbearance payments are required
to be paid at the end of the original term loan.
(a) The weighted-average interest rate reduction was primarily driven by commercial cards.
Loans that receive a forbearance plan generally remain
receiving a term extension or modification. Therefore, loans
in default until they are no longer delinquent as the result of
only receiving forbearance plans are not included in the
the payment of all past due amounts or the borrower
table below.
The following table provides a summary of loan balances as of December 31, which were modified during the prior twelve
months, by portfolio class and delinquency status:
90 Days or
30-89 Days
More Past
(Dollars in Millions)
Current
Past Due
Due
Total
2024
Commercial
$
395 $
26 $
167 $
588
Commercial real estate
Residential mortgages(a)
Credit card
875
1,469
302
26
4
73
319
6
39
1,220
1,479
414
Other retail
112
19
6
137
Total loans
$
3,153 $
148 $
537 $
3,838
2023
Commercial
$
255 $
12 $
98 $
365
Commercial real estate
Residential mortgages(a)
524
1,385
—
24
193
16
717
1,425
Credit card
251
67
32
350
Other retail
133
21
8
162
Total loans
$
2,548 $
124 $
347 $
3,019
(a) At December 31, 2024, $442 million of loans 30-89 days past due and $324 million of loans 90 days or more past due purchased and that could be purchased from GNMA
mortgage pools under delinquent loan repurchase options whose payments are insured by the Federal Housing Administration or guaranteed by the United States Department of
Veterans Affairs, were classified as current, compared with $372 million and $175 million at December 31, 2023, respectively.
89
The following table provides a summary of loans that defaulted (fully or partially charged-off or became 90 days or more past
due) that were modified within twelve months prior to default.
Interest Rate
Multiple
Year Ended December 31 (Dollars in Millions)
Reduction Payment Delay Term Extension Modifications(a)
2024
Commercial
$
30 $
— $
45 $
—
Commercial real estate
43
—
137
—
Residential mortgages
—
3
—
3
Credit card
128
—
—
—
Other retail
2
—
20
—
Total loans, excluding loans purchased from GNMA mortgage pools
203
3
202
3
Loans purchased from GNMA mortgage pools
1
168
78
89
Total loans
$
204 $
171 $
280 $
92
(a) Includes $81 million of total loans receiving a payment delay and term extension, $8 million of total loans receiving an interest rate reduction and term extension and $3 million of
total loans receiving an interest rate reduction, payment delay and term extension.
The following table provides a summary of loans that defaulted (fully or partially charged-off or became 90 days or more past
due) that were modified on or after January 1, 2023, the date the Company adopted accounting guidance which removed the
separate recognition and measurement of troubled debt restructurings, through December 31, 2023:
Interest Rate
Multiple
Year Ended December 31 (Dollars in Millions)
Reduction Payment Delay Term Extension Modifications(a)
2023
Commercial
$
7 $
— $
— $
—
Commercial real estate
—
—
1
—
Residential mortgages
—
8
2
1
Credit card
35
—
—
—
Other retail
1
1
11
—
Total loans, excluding loans purchased from GNMA mortgage pools
43
9
14
1
Loans purchased from GNMA mortgage pools
—
67
30
37
Total loans
$
43 $
76 $
44 $
38
(a) Represents loans receiving a payment delay and term extension.
As of December 31, 2024, the Company had $510 million of commitments to lend additional funds to borrowers whose terms
of their outstanding owed balances have been modified.
90 U.S. Bancorp 2024 Annual Report
NOTE 6 Leases
The Company, as a lessor, originates retail and commercial
dollar assets such as aircraft or lower cost items such as
leases either directly to the consumer or indirectly through
office equipment.
dealer networks. Retail leases consist primarily of
automobiles, while commercial leases may include high
The components of the net investment in sales-type and direct financing leases, at December 31, were as follows:
(Dollars in Millions)
2024
2023
Lease receivables
$ 7,328
$ 7,239
Unguaranteed residual values accruing to the lessor’s benefit
911
1,082
Total net investment in sales-type and direct financing leases
$ 8,239
$ 8,321
The Company, as a lessor, recorded $775 million, $738
2024, 2023 and 2022, respectively, primarily consisting of
million and $764 million of revenue on its Consolidated
interest income on sales-type and direct financing leases.
Statement of Income for the years ended December 31,
The contractual future lease payments to be received by the Company, at December 31, 2024, were as follows:
Sales-type and
Direct Financing
Operating
(Dollars in Millions)
Leases
Leases
2025
$
2,758 $
143
2026
2,142
104
2027
1,804
77
2028
865
52
2029
269
32
Thereafter
335
54
Total lease payments
8,173 $
462
Amounts representing interest
(845)
Lease receivables
$
7,328
The Company, as lessee, leases certain assets for use
respectively, compared with $1.4 billion of ROU assets and
in its operations. Leased assets primarily include retail
$1.6 billion of lease liabilities at December 31, 2023,
branches, operations centers and other corporate
respectively.
locations, and, to a lesser extent, office and computer
Total costs incurred by the Company, as a lessee, were
equipment. For each lease with an original term greater
$529 million, $496 million and $390 million for the years
than 12 months, the Company records a lease liability and
ended December 31, 2024, 2023 and 2022, respectively,
a corresponding ROU asset. At December 31, 2024, the
and principally related to contractual lease payments on
Company’s ROU assets included in premises and
operating leases. The Company’s leases do not impose
equipment and lease liabilities included in long-term debt
significant covenants or other restrictions on the Company.
and other liabilities, were $1.4 billion and $1.5 billion,
The following table presents amounts relevant to the Company’s assets leased for use in its operations for the years ended
December 31:
(Dollars in Millions)
2024
2023
2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$ 389 $ 409 $ 294
Operating cash flows from finance leases
7
7
4
Financing cash flows from finance leases
62
49
14
Right of use assets obtained in exchange for new operating lease liabilities
268
230
239
Right of use assets obtained in exchange for new finance lease liabilities
59
25
91
91
The following table presents the weighted-average remaining lease terms and discount rates of the Company’s assets leased for
use in its operations at December 31:
2024
2023
Weighted-average remaining lease term of operating leases (in years)
6.7
6.4
Weighted-average remaining lease term of finance leases (in years)
8.1
8.3
Weighted-average discount rate of operating leases
4.0 %
3.7 %
Weighted-average discount rate of finance leases
7.3 %
7.7 %
The contractual future lease obligations of the Company at December 31, 2024, were as follows:
Operating
Finance
(Dollars in Millions)
Leases
Leases
2025
$
324 $
38
2026
291
37
2027
248
34
2028
195
26
2029
147
8
Thereafter
382
24
Total lease payments
1,587
167
Amounts representing interest
(218)
(18)
Lease liabilities
$
1,369 $
149
NOTE 7 Accounting for Transfers and Servicing of Financial Assets and Variable
Interest Entities
The Company transfers financial assets in the normal
course of business. The majority of the Company’s financial
asset transfers are residential mortgage loan sales primarily
to GSEs, transfers of tax-advantaged investments,
commercial loan sales through participation agreements,
and other individual or portfolio loan and securities sales. In
accordance with the accounting guidance for asset
transfers, the Company considers any ongoing involvement
with transferred assets in determining whether the assets
can be derecognized from the balance sheet. Guarantees
provided to certain third parties in connection with the
transfer of assets are further discussed in Note 22.
For loans sold under participation agreements, the
Company also considers whether the terms of the loan
participation agreement meet the accounting definition of a
participating interest. With the exception of servicing and
certain performance-based guarantees, the Company’s
continuing involvement with financial assets sold is minimal
and generally limited to market customary representation
and warranty clauses. Any gain or loss on sale depends on
the previous carrying amount of the transferred financial
assets, the consideration received, and any liabilities
incurred in exchange for the transferred assets. Upon
transfer, any servicing assets and other interests that
continue to be held by the Company are initially recognized
at fair value. For further information on MSRs, refer to Note
9. On a limited basis, the Company may acquire and
package high-grade corporate bonds for select corporate
customers, in which the Company generally has no
continuing involvement with these transactions.
Additionally, the Company is an authorized GNMA issuer
and issues GNMA securities on a regular basis. The
Company has no other asset securitizations or similar
asset-backed financing arrangements that are off-balance
sheet.
The Company previously provided financial support
primarily through the use of waivers of trust and investment
management fees associated with various unconsolidated
registered money market funds it manages. The Company
discontinued providing this support beginning in the third
quarter of 2022 due to rising interest rates in 2022. The
Company provided $65 million of support to the funds
during the year ended December 31, 2022.
The Company is involved in various entities that are
considered to be VIEs. The Company’s investments in VIEs
are primarily related to investments promoting affordable
housing, community development and renewable energy
sources. Some of these tax-advantaged investments
support the Company’s regulatory compliance with the
Community Reinvestment Act. The Company’s investments
in these entities generate a return primarily through the
realization of federal and state income tax credits, and
other tax benefits, such as tax deductions from operating
losses of the investments, over specified time periods.
These tax credits are recognized as a reduction of tax
expense or, for investments qualifying as investment tax
credits, as a reduction to the related investment asset. The
Company recognized federal and state income tax credits
related to its affordable housing and other tax-advantaged
investments in tax expense of $585 million, $576 million and
$461 million for the years ended December 31, 2024, 2023
and 2022, respectively. The Company recognized $573
million, $582 million and $424 million of expenses related to
all of these investments for the years ended December 31,
2024, 2023 and 2022, respectively, which were primarily
included in tax expense.
92 U.S. Bancorp 2024 Annual Report
The Company is not required to consolidate VIEs in
which it has concluded it does not have a controlling
financial interest, and thus is not the primary beneficiary. In
such cases, the Company does not have both the power to
direct the entities’ most significant activities and the
obligation to absorb losses or the right to receive benefits
that could potentially be significant to the VIEs.
The Company’s investments in these unconsolidated
VIEs are carried in other assets on the Consolidated
Balance Sheet. The Company’s unfunded capital and other
commitments related to these unconsolidated VIEs are
generally carried in other liabilities on the Consolidated
Balance Sheet. The Company’s maximum exposure to loss
from these unconsolidated VIEs include the investment
recorded on the Company’s Consolidated Balance Sheet,
net of unfunded capital commitments, and previously
recorded tax credits which remain subject to recapture by
taxing authorities based on compliance features required to
be met at the project level. While the Company believes
potential losses from these investments are remote, the
maximum exposure was determined by assuming a
scenario where the community-based business and
housing projects completely fail and do not meet certain
government compliance requirements resulting in
recapture of the related tax credits.
The following table provides a summary of investments in
community development and tax-advantaged VIEs that the
Company has not consolidated:
At December 31 (Dollars in Millions)
2024
2023
Investment carrying amount
$ 8,107 $ 6,659
Unfunded capital and other
commitments
5,032
3,619
Maximum exposure to loss
8,435
9,002
The Company also has noncontrolling financial
investments in private investment funds and partnerships
considered to be VIEs, which are not consolidated. The
Company’s recorded investment in these entities, carried in
other assets on the Consolidated Balance Sheet, was
approximately $264 million at December 31, 2024 and $219
million at December 31, 2023. The maximum exposure to
loss related to these VIEs was $382 million at December 31,
2024 and $319 million at December 31, 2023, representing
the Company’s investment balance and its unfunded
commitments to invest additional amounts.
The Company also held senior notes of $3.2 billion as
available-for-sale investment securities at December 31,
2024, compared with $5.3 billion at December 31, 2023.
These senior notes were issued by third-party securitization
vehicles that held $3.6 billion at December 31, 2024 and
$6.1 billion at December 31, 2023 of indirect auto loans that
collateralize the senior notes. These VIEs are not
consolidated by the Company.
The Company’s individual net investments in
unconsolidated VIEs, which exclude any unfunded capital
commitments, ranged from less than $1 million to $79
million at December 31, 2024, compared with less than $1
million to $86 million at December 31, 2023.
The Company is required to consolidate VIEs in which it
has concluded it has a controlling financial interest. The
Company sponsors entities to which it transfers its interests
in tax-advantaged investments to third parties. At
December 31, 2024, approximately $6.4 billion of the
Company’s assets and $4.2 billion of its liabilities included
on the Consolidated Balance Sheet were related to
community development and tax-advantaged investment
VIEs which the Company has consolidated, primarily
related to these transfers. These amounts compared to $6.1
billion and $4.4 billion, respectively, at December 31, 2023.
The majority of the assets of these consolidated VIEs are
reported in other assets, and the liabilities are reported in
long-term debt and other liabilities. The assets of a
particular VIE are the primary source of funds to settle its
obligations. The creditors of the VIEs do not have recourse
to the general credit of the Company. The Company’s
exposure to the consolidated VIEs is generally limited to the
carrying value of its variable interests plus any related tax
credits previously recognized or transferred to others with a
guarantee.
During 2024 the Company ended its previously
sponsored municipal bond securities tender option bond
program. The Company controlled the activities of the
program’s entities and was entitled to the residual returns
and provided liquidity and remarketing arrangements to the
program. The Company had previously consolidated the
program’s entities, and at December 31, 2023, included
$607 million of available-for-sale investment securities and
$381 million of short-term borrowings on the Consolidated
Balance Sheet related to this program.
93
Premises and Equipment
Premises and equipment at December 31 consisted of the following:
(Dollars in Millions)
2024
2023
Land
$
498 $
515
Buildings and improvements
3,121
3,239
Furniture, fixtures and equipment
3,010
3,013
Right of use assets on operating leases
1,114
1,149
Right of use assets on finance leases
314
275
Construction in progress
96
68
Total premises and equipment, gross
8,153
8,259
Less accumulated depreciation and amortization
(4,588)
(4,636)
Total premises and equipment, net
$ 3,565 $ 3,623
NOTE 8
NOTE 9 Mortgage Servicing Rights
The Company capitalizes MSRs as separate assets when
loans are sold and servicing is retained. MSRs may also be
purchased from others. The Company carries MSRs at fair
value, with changes in the fair value recorded in earnings
during the period in which they occur. The Company
serviced $216.6 billion of residential mortgage loans for
others at December 31, 2024, and $233.4 billion at
December 31, 2023, including subserviced mortgages with
no corresponding MSR asset. Included in mortgage
banking revenue are the MSR fair value changes arising
from market rate and model assumption changes, net of the
value change in derivatives used to economically hedge
MSRs. These changes resulted in net losses of $2 million,
$41 million and $45 million for the years ended
December 31, 2024, 2023 and 2022, respectively. Loan
servicing and ancillary fees, not including valuation
changes, included in mortgage banking revenue were $699
million, $733 million and $754 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
Changes in fair value of capitalized MSRs are summarized as follows:
(Dollars in Millions)
2024
2023
2022
Balance at beginning of period
$ 3,377 $ 3,755 $ 2,953
Rights purchased
1
5
156
Rights capitalized
276
373
590
Rights sold
(188)
(440)
(255)
Changes in fair value of MSRs
Due to fluctuations in market interest rates(a)
235
66
804
Due to revised assumptions or models(b)
43
12
(29)
Other changes in fair value(c)
(375)
(394)
(464)
Balance at end of period
$ 3,369 $ 3,377 $ 3,755
(a) Includes changes in MSR value associated with changes in market interest rates, including estimated prepayment rates and anticipated earnings on escrow deposits.
(b) Includes changes in MSR value not caused by changes in market interest rates, such as changes in assumed cost to service, ancillary income and option adjusted spread, as well
as the impact of any model changes.
(c) Primarily the change in MSR value from passage of time and cash flows realized (decay), but also includes the impact of changes to expected cash flows not associated with
changes in market interest rates, such as the impact of delinquencies.
The estimated sensitivity to changes in interest rates of the fair value of the MSR portfolio and the related derivative instruments
as of December 31 follows:
2024
2023
Down
Down
Down
Up
Up
Up
Down
Down
Down
Up
Up
Up
(Dollars in Millions)
100 bps
50 bps
25 bps
25 bps
50 bps
100 bps
100 bps
50 bps
25 bps
25 bps
50 bps
100 bps
MSR portfolio
$ (310) $ (144) $ (69) $
63 $ 120 $
217 $ (370) $ (173) $ (84) $
77 $ 147 $
268
Derivative instrument hedges
325
147
69
(61)
(118)
(220)
381
178
86
(79)
(152)
(289)
Net sensitivity
$
15 $
3 $
— $
2 $
2 $
(3) $
11 $
5 $
2 $
(2) $
(5) $
(21)
94 U.S. Bancorp 2024 Annual Report
The fair value of MSRs and their sensitivity to changes in
limited adjustable-rate or jumbo mortgage loans. The HFA
interest rates is influenced by the mix of the servicing
servicing portfolio is comprised of loans originated under
portfolio and characteristics of each segment of the
state and local housing authority program guidelines which
portfolio. The Company’s servicing portfolio consists of the
assist purchases by first-time or low- to moderate-income
distinct portfolios of government-insured mortgages,
homebuyers through a favorable rate subsidy, down
conventional mortgages and Housing Finance Agency
payment and/or closing cost assistance on government-
(“HFA”) mortgages. The servicing portfolios are
and conventional-insured mortgages.
predominantly comprised of fixed-rate agency loans with
A summary of the Company’s MSRs and related characteristics by portfolio as of December 31 follows:
2024
2023
(Dollars in Millions)
HFA
Government
Conventional(d)
Total
Servicing portfolio(a)
$52,807
$ 25,139
$ 138,428
Fair value
$
856
$
512
$
2,001
Value (bps)(b)
162
204
145
Weighted-average servicing fees
(bps)
35
45
25
Multiple (value/servicing fees)
4.57
4.56
5.69
Weighted-average note rate
4.92 %
4.35 %
3.87 %
Weighted-average age (in years)
4.5
6.1
5.0
Weighted-average expected
prepayment (constant
prepayment rate)
9.9 %
10.2 %
7.8 %
Weighted-average expected life
(in years)
7.5
6.8
7.4
Weighted-average option
adjusted spread(c)
5.8 %
6.2 %
5.6 %
$216,374
$ 3,369
156
30
5.17
4.18 %
5.0
8.6 %
7.4
5.7 %
HFA
Government
Conventional(d)
Total
$48,286
$ 25,996
$ 151,056
$225,338
$
769
$
507
$
2,101
$ 3,377
159
195
139
150
36
44
26
30
4.45
4.41
5.41
5.00
4.56 %
4.23 %
3.81 %
4.02 %
4.3
5.5
4.3
4.4
10.5 %
11.1 %
9.1 %
9.6 %
7.2
6.5
7.0
7.0
5.4 %
5.9 %
4.6 %
4.9 %
(a) Represents principal balance of mortgages having corresponding MSR asset.
(b) Calculated as fair value divided by the servicing portfolio.
(c) Option adjusted spread is the incremental spread added to the risk-free rate to reflect optionality and other risk inherent in the MSRs.
(d) Represents loans sold primarily to GSEs.
Intangible Assets
Intangible assets consisted of the following:
At December 31 (Dollars in Millions)
Goodwill
Core deposit benefits
Mortgage servicing rights
Other identified intangibles
Total
2024
$ 12,536
1,702
3,369
476
$ 18,083
2023
$ 12,489
2,134
3,377
573
$ 18,573
Aggregate amortization expense consisted of the following:
Year Ended December 31 (Dollars in Millions)
Core deposit benefits
Other identified intangibles
Total
$
$
2024
432
137
569
2023
$
481
155
$
636
2022
$
53
162
$
215
NOTE 10
95
The estimated amortization expense for the next five years is as follows:
(Dollars in Millions)
2025
$
489
2026
422
2027
353
2028
290
2029
223
The following table reflects the changes in the carrying value of goodwill for the years ended December 31, 2024, 2023 and
2022:
Wealth,
Corporate,
(Dollars in Millions)
Commercial and
Institutional
Banking
Consumer and
Business
Banking
Payment
Services
Treasury and
Corporate
Support
Consolidated
Company
Balance at December 31, 2021
$
3,673 $
3,245 $
3,344 $
— $
10,262
Goodwill acquired
918
1,220
11
—
2,149
Foreign exchange translation and other
(2)
—
(36)
—
(38)
Balance at December 31, 2022
$
4,589 $
4,465 $
3,319 $
— $
12,373
Goodwill acquired
235
(139)
—
—
96
Foreign exchange translation and other
1
—
19
—
20
Balance at December 31, 2023
$
4,825 $
4,326 $
3,338 $
— $
12,489
Goodwill acquired
—
—
80
—
80
Foreign exchange translation and other
Balance at December 31, 2024
$
Deposits
The composition of deposits at December 31 was as follows:
(Dollars in Millions)
(2)
4,823 $
—
4,326 $
(31)
3,387 $
—
— $
2024
(33)
12,536
2023
NOTE 11
Noninterest-bearing deposits
$
84,158 $
89,989
Interest-bearing deposits
Interest checking
127,188
127,453
Money market savings
206,805
199,378
Savings accounts
45,389
43,219
Time deposits
54,769
52,273
Total interest-bearing deposits
434,151
422,323
Total deposits
$ 518,309 $ 512,312
The maturities of time deposits outstanding at December 31, 2024 were as follows:
(Dollars in Millions)
2025
$ 51,876
2026
2,045
2027
310
2028
149
2029
387
Thereafter
2
Total
$ 54,769
96 U.S. Bancorp 2024 Annual Report
NOTE 12 Short-Term Borrowings
Short-term borrowings at December 31 consisted of the following:
(Dollars in Millions)
2024
2023
Federal funds purchased
$
252 $
248
Securities sold under agreements to repurchase
7,642
3,576
Commercial paper
4,288
7,773
Other short-term borrowings
3,336
3,682
Total
$ 15,518 $ 15,279
NOTE 13 Long-Term Debt
Long-term debt (debt with original maturities of more than one year) at December 31 consisted of the following:
(Dollars in Millions)
Rate Type
Rate(a)
Maturity Date
2024
2023
U.S. Bancorp (Parent Company)
Subordinated notes
Fixed
3.600 %
2024 $
— $
1,000
Fixed
7.500 %
2026
199
199
Fixed
3.100 %
2026
1,000
1,000
Fixed
3.000 %
2029
1,000
1,000
Fixed
4.967 %
2033
1,300
1,300
Fixed
2.491 %
2036
1,300
1,300
Medium-term notes
Fixed
1.375% - 6.787%
2025 - 2039
27,939
26,618
Floating
3.813 %
2028
519
—
Other(b)
2,000
1,915
Subtotal
35,257
34,332
Subsidiaries
Federal Home Loan Bank advances
Fixed
1.860% - 8.250%
2025 - 2027
12,550
9,051
Floating
5.190% - 5.210%
2025 - 2026
3,000
3,000
Bank notes
Fixed
2.050% - 5.550%
2025 - 2032
3,405
2,289
Floating
—% - 4.588%
2027 - 2062
1,813
1,324
Other(c)
1,977
1,484
Subtotal
22,745
17,148
Total
$ 58,002 $ 51,480
(a) Weighted-average interest rates of medium-term notes, Federal Home Loan Bank advances and bank notes were 4.40 percent, 4.63 percent and 3.08 percent, respectively.
(b) Includes $2.2 billion and $2.1 billion at December 31, 2024 and 2023, respectively, of discounted noninterest-bearing additional cash received by the Company upon close of its
2022 acquisition of MUB from Mitsubishi UFJ Financial Group ("MUFG") to be delivered to MUFG on or prior to December 1, 2027, discounted at the Company’s 5-year unsecured
borrowing rate as of the acquisition date, as well as debt issuance fees and unrealized gains and losses and deferred amounts relating to derivative instruments.
(c) Includes consolidated community development and tax-advantaged investment VIEs, finance lease obligations, debt issuance fees, and unrealized gains and losses and deferred
amounts relating to derivative instruments.
The Company has arrangements with the Federal Home
Maturities of long-term debt outstanding at December 31,
Loan Bank and Federal Reserve Bank whereby the
2024, were:
Company could have borrowed an additional $171.2 billion
Parent
and $215.8 billion at December 31, 2024 and 2023,
(Dollars in Millions)
Company Consolidated
respectively.
2025
$
2,106 $
8,199
2026
3,917
13,471
2027
4,757
10,045
2028
4,402
4,430
2029
4,472
4,480
Thereafter
15,603
17,377
Total
$
35,257 $
58,002
97
NOTE 14 Shareholders' Equity
At December 31, 2024 and 2023, the Company had
authority to issue 4 billion shares of common stock and 50
million shares of preferred stock. The Company had 1.6
billion shares of common stock outstanding at
December 31, 2024 and 2023. The Company had 59 million
shares reserved for future issuances, primarily under its
stock incentive plans at December 31, 2024.
The number of shares issued and outstanding and the carrying amount of each outstanding series of the Company’s preferred
stock at December 31 were as follows:
2024
2023
Shares
Shares
Issued and
Liquidation
Carrying
Issued and
Liquidation
Carrying
(Dollars in Millions)
Outstanding
Preference
Discount
Amount
Outstanding
Preference
Discount
Amount
Series A
12,510 $
1,251 $
145 $
1,106
12,510 $
1,251 $
145 $
1,106
Series B
40,000
1,000
—
1,000
40,000
1,000
—
1,000
Series J
40,000
1,000
7
993
40,000
1,000
7
993
Series K
23,000
575
10
565
23,000
575
10
565
Series L
20,000
500
14
486
20,000
500
14
486
Series M
30,000
750
21
729
30,000
750
21
729
Series N
60,000
1,500
8
1,492
60,000
1,500
8
1,492
Series O
18,000
450
13
437
18,000
450
13
437
Total preferred stock(a)
243,510 $
7,026 $
218 $
6,808
243,510 $
7,026 $
218 $
6,808
(a) The par value of all shares issued and outstanding at December 31, 2024 and 2023, was $1.00 per share.
During 2022, the Company issued depositary shares
representing an ownership interest in 18,000 shares of
Series O Non-Cumulative Perpetual Preferred Stock with a
liquidation preference of $25,000 per share (the “Series O
Preferred Stock”). The Series O Preferred Stock has no
stated maturity and will not be subject to any sinking fund
or other obligation of the Company. Dividends, if declared,
will accrue and be payable quarterly, in arrears, at a rate
per annum equal to 4.50 percent. The Series O Preferred
Stock is redeemable at the Company’s option, in whole or
in part, on or after April 15, 2027. The Series O Preferred
Stock is redeemable at the Company’s option, in whole, but
not in part, prior to April 15, 2027 within 90 days following
an official administrative or judicial decision, amendment to,
or change in the laws or regulations that would not allow the
Company to treat the full liquidation value of the Series O
Preferred Stock as Tier 1 capital for purposes of the capital
adequacy guidelines of the Federal Reserve Board.
During 2021, the Company issued depositary shares
representing an ownership interest in 60,000 shares of
Series N Fixed Rate Reset Non-Cumulative Perpetual
Preferred Stock with a liquidation preference of $25,000 per
share (the “Series N Preferred Stock”). The Series N
Preferred Stock has no stated maturity and will not be
subject to any sinking fund or other obligation of the
Company. Dividends, if declared, will accrue and be
payable quarterly, in arrears, at a rate per annum equal to
3.70 percent from the date of issuance to, but excluding,
January 15, 2027, and thereafter will accrue and be
payable quarterly at a floating rate per annum equal to the
five-year treasury rate plus 2.541 percent. The Series N
Preferred Stock is redeemable at the Company’s option, in
whole or in part, on or after January 15, 2027. The Series N
Preferred Stock is redeemable at the Company’s option, in
whole, but not in part, prior to January 15, 2027 within 90
days following an official administrative or judicial decision,
amendment to, or change in the laws or regulations that
would not allow the Company to treat the full liquidation
value of the Series N Preferred Stock as Tier 1 capital for
purposes of the capital adequacy guidelines of the Federal
Reserve Board.
During 2021, the Company issued depositary shares
representing an ownership interest in 30,000 shares of
Series M Non-Cumulative Perpetual Preferred Stock with a
liquidation preference of $25,000 per share (the “Series M
Preferred Stock”). The Series M Preferred Stock has no
stated maturity and will not be subject to any sinking fund
or other obligation of the Company. Dividends, if declared,
will accrue and be payable quarterly, in arrears, at a rate
per annum equal to 4.00 percent. The Series M Preferred
Stock is redeemable at the Company’s option, in whole or
in part, on or after April 15, 2026. The Series M Preferred
Stock is redeemable at the Company’s option, in whole, but
not in part, prior to April 15, 2026 within 90 days following
an official administrative or judicial decision, amendment to,
or change in the laws or regulations that would not allow the
Company to treat the full liquidation value of the Series M
Preferred Stock as Tier 1 capital for purposes of the capital
adequacy guidelines of the Federal Reserve Board.
During 2020, the Company issued depositary shares
representing an ownership interest in 20,000 shares of
Series L Non-Cumulative Perpetual Preferred Stock with a
liquidation preference of $25,000 per share (the “Series L
Preferred Stock”). The Series L Preferred Stock has no
stated maturity and will not be subject to any sinking fund
or other obligation of the Company. Dividends, if declared,
will accrue and be payable quarterly, in arrears, at a rate
per annum equal to 3.75 percent. The Series L Preferred
Stock is redeemable at the Company’s option, in whole or
in part, on or after January 15, 2026. The Series L Preferred
98 U.S. Bancorp 2024 Annual Report
Stock is redeemable at the Company’s option, in whole, but
not in part, prior to January 15, 2026 within 90 days
following an official administrative or judicial decision,
amendment to, or change in the laws or regulations that
would not allow the Company to treat the full liquidation
value of the Series L Preferred Stock as Tier 1 capital for
purposes of the capital adequacy guidelines of the Federal
Reserve Board.
During 2018, the Company issued depositary shares
representing an ownership interest in 23,000 shares of
Series K Non-Cumulative Perpetual Preferred Stock with a
liquidation preference of $25,000 per share (the “Series K
Preferred Stock”). The Series K Preferred Stock has no
stated maturity and will not be subject to any sinking fund
or other obligation of the Company. Dividends, if declared,
will accrue and be payable quarterly, in arrears, at a rate
per annum equal to 5.50 percent. The Series K Preferred
Stock is redeemable at the Company’s option, in whole or
in part.
During 2017, the Company issued depositary shares
representing an ownership interest in 40,000 shares of
Series J Non-Cumulative Perpetual Preferred Stock with a
liquidation preference of $25,000 per share (the “Series J
Preferred Stock”). The Series J Preferred Stock has no
stated maturity and will not be subject to any sinking fund
or other obligation of the Company. Dividends, if declared,
will accrue and be payable semiannually, in arrears, at a
rate per annum equal to 5.30 percent from the date of
issuance to, but excluding, April 15, 2027, and thereafter
will accrue and be payable quarterly at a floating rate per
annum equal to 2.914 percent above the three-month CME
Term Secured Overnight Financing Rate (“SOFR”) plus a
credit spread adjustment of 0.26161 percent. The Series J
Preferred Stock is redeemable at the Company’s option, in
whole or in part, on or after April 15, 2027. The Series J
Preferred Stock is redeemable at the Company’s option, in
whole, but not in part, prior to April 15, 2027 within 90 days
following an official administrative or judicial decision,
amendment to, or change in the laws or regulations that
would not allow the Company to treat the full liquidation
value of the Series J Preferred Stock as Tier 1 capital for
purposes of the capital adequacy guidelines of the Federal
Reserve Board.
During 2010, the Company issued depositary shares
representing an ownership interest in 5,746 shares of
Series A Non-Cumulative Perpetual Preferred Stock (the
“Series A Preferred Stock”) to investors, in exchange for
their portion of USB Capital IX Income Trust Securities.
During 2011, the Company issued depositary shares
representing an ownership interest in 6,764 shares of
Series A Preferred Stock to USB Capital IX, thereby settling
the stock purchase contract established between the
Company and USB Capital IX as part of the 2006 issuance
of USB Capital IX Income Trust Securities. The preferred
shares were issued to USB Capital IX for the purchase
price specified in the stock forward purchase contract. The
Series A Preferred Stock has a liquidation preference of
$100,000 per share, no stated maturity and will not be
subject to any sinking fund or other obligation of the
Company. Dividends, if declared, will accrue and be
payable quarterly, in arrears, at a rate per annum equal to
the greater of 1.02 percent above three-month CME Term
SOFR plus a credit spread adjustment of 0.26161 percent,
or 3.50 percent. The Series A Preferred Stock is
redeemable at the Company’s option, subject to prior
approval by the Federal Reserve Board.
During 2006, the Company issued depositary shares
representing an ownership interest in 40,000 shares of
Series B Non-Cumulative Perpetual Preferred Stock with a
liquidation preference of $25,000 per share (the “Series B
Preferred Stock”). The Series B Preferred Stock has no
stated maturity and will not be subject to any sinking fund
or other obligation of the Company. Dividends, if declared,
will accrue and be payable quarterly, in arrears, at a rate
per annum equal to the greater of 0.60 percent above
three-month CME Term SOFR plus a credit spread
adjustment of 0.26161 percent, or 3.50 percent. The Series
B Preferred Stock is redeemable at the Company’s option,
subject to the prior approval of the Federal Reserve Board.
During 2024, 2023 and 2022, the Company repurchased
shares of its common stock under various authorizations
approved by its Board of Directors. As of December 31,
2024, the approximate dollar value of shares that may yet
be purchased by the Company under the current Board of
Directors approved authorization was $4.9 billion. Share
repurchases are subject to the approval of the Company's
Board of Directors and compliance with regulatory
requirements.
The following table summarizes the Company’s common
stock repurchased in each of the last three years:
(Dollars and Shares in Millions)
Shares
Value
2024
4 $ 173
2023
1
62
2022
1
69
99
Shareholders’ equity is affected by transactions and valuations of asset and liability positions that require adjustments to
accumulated other comprehensive income (loss). The reconciliation of the transactions affecting accumulated other
comprehensive income (loss) included in shareholders’ equity for the years ended December 31, is as follows:
Unrealized
Gains
(Losses) on
Investment
Securities
Unrealized Transferred
Gains
From
(Losses) on
Unrealized
Unrealized
Available-
Investment
Gains
Gains
For-Sale to
Securities
(Losses) on (Losses) on
Debit
Foreign
Available-
Held-To-
Derivative
Retirement
Valuation
Currency
(Dollars in Millions)
For-Sale
Maturity
Hedges
Plans Adjustments
Translation
Total
2024
Balance at beginning of period
$ (5,151) $ (3,537) $
(242) $ (1,138) $
— $
(28) $ (10,096)
Changes in unrealized gains (losses)
(60)
—
(676)
245
1
—
(490)
Foreign currency translation adjustment(a)
—
—
—
—
—
18
18
Reclassification to earnings of realized (gains) losses
154
499
258
(1)
—
—
910
Applicable income taxes
(21)
(127)
107
(61)
—
(4)
(106)
Balance at end of period
$ (5,078) $ (3,165) $
(553) $
(955) $
1 $
(14) $ (9,764)
2023
Balance at beginning of period
$ (6,378) $ (3,933) $
(114) $
(939) $
— $
(43) $ (11,407)
Changes in unrealized gains (losses)
1,500
—
(252)
(262)
—
—
986
Foreign currency translation adjustment(a)
—
—
—
—
—
21
21
Reclassification to earnings of realized (gains) losses
145
530
80
(7)
—
—
748
Applicable income taxes
(418)
(134)
44
70
—
(6)
(444)
Balance at end of period
$ (5,151) $ (3,537) $
(242) $ (1,138) $
— $
(28) $ (10,096)
2022
Balance at beginning of period
$
540 $
(935) $
(85) $ (1,426) $
— $
(37) $ (1,943)
Changes in unrealized gains and losses
(13,656)
—
(75)
526
—
—
(13,205)
Transfer of securities from available-for-sale to held-to-
maturity
4,413
(4,413)
—
—
—
—
—
Foreign currency translation adjustment(a)
—
—
—
—
—
(10)
(10)
Reclassification to earnings of realized (gains) losses
(20)
400
36
128
—
—
544
Applicable income taxes
2,345
1,015
10
(167)
—
4
3,207
Balance at end of period
$ (6,378) $ (3,933) $
(114) $
(939) $
— $
(43) $ (11,407)
(a) Represents the impact of changes in foreign currency exchange rates on the Company’s investment in foreign operations and related hedges.
100 U.S. Bancorp 2024 Annual Report
Additional detail about the impact to net income for items reclassified out of accumulated other comprehensive income (loss)
and into earnings for the years ended December 31 is as follows:
Impact to Net Income
Affected Line Item in the
(Dollars in Millions)
2024
2023
2022
Consolidated Statement of Income
Unrealized gains (losses) on investment securities available-for-sale
Realized gains (losses) on sales of investment securities
$
(154) $
(145) $
20 Securities gains (losses), net
39
37
(5) Applicable income taxes
(115)
(108)
15 Net-of-tax
Unrealized gains (losses) on investment securities transferred from
available-for-sale to held-to-maturity
Amortization of unrealized gains (losses)
(499)
(530)
(400) Interest income
127
134
119 Applicable income taxes
(372)
(396)
(281) Net-of-tax
Unrealized gains (losses) on derivative hedges
Realized gains (losses) on derivative hedges
(258)
(80)
(36) Net interest income
66
21
9 Applicable income taxes
(192)
(59)
(27) Net-of-tax
Unrealized gains (losses) on retirement plans
Actuarial gains (losses) and prior service cost (credit) amortization
1
7
(128) Other noninterest expense
—
(2)
33 Applicable income taxes
1
5
(95) Net-of-tax
Total impact to net income
$
(678) $
(558) $
(388)
Regulatory Capital The Company uses certain measures
defined by bank regulatory agencies to assess its capital.
The regulatory capital requirements effective for the
Company follow Basel III, with the Company being subject
to calculating its capital adequacy as a percentage of risk-
weighted assets under the standardized approach.
Tier 1 capital is considered core capital and includes
common shareholders’ equity adjusted for the aggregate
impact of certain items included in other comprehensive
income (loss) (“common equity tier 1 capital”), plus
qualifying preferred stock, trust preferred securities and
noncontrolling interests in consolidated subsidiaries subject
to certain limitations. Total risk-based capital includes Tier 1
capital and other items such as subordinated debt and the
allowance for credit losses. Capital measures are stated as
a percentage of risk-weighted assets, which are measured
based on their perceived credit risks and include certain
off-balance sheet exposures, such as unfunded loan
commitments, letters of credit, and derivative contracts.
Beginning in 2022, the Company began to phase into its
regulatory capital requirements the cumulative deferred
impact of its 2020 adoption of the accounting guidance
related to the impairment of financial instruments based on
the CECL methodology plus 25 percent of its quarterly
credit reserve increases during 2020 and 2021. This
cumulative deferred impact was phased into the
Company’s regulatory capital during 2022 through 2024,
culminating with a fully phased in regulatory capital
calculation beginning in 2025.
The Company is also subject to leverage ratio
requirements, which is defined as Tier 1 capital as a
percentage of adjusted average assets under the
standardized approach and Tier 1 capital as a percentage
of total on- and off-balance sheet leverage exposure under
more risk-sensitive advanced approaches.
101
The following table provides a summary of the regulatory capital requirements in effect, along with the actual components and
ratios for the Company and its bank subsidiaries:
U.S. Bancorp
U.S. Bank National Association
At December 31 (Dollars in Millions)
2024
2023
2024
2023
Basel III Standardized Approach:
Common equity tier 1 capital
$ 47,877
$ 44,947
$ 59,866
$ 58,194
Tier 1 capital
55,129
52,199
60,311
58,638
Total risk-based capital
64,375
61,921
69,947
68,817
Risk-weighted assets
450,498
453,390
443,426
445,829
Common equity tier 1 capital as a percent of risk-weighted assets
10.6 %
9.9 %
13.5 %
13.1 %
Tier 1 capital as a percent of risk-weighted assets
12.2
11.5
13.6
13.2
Total risk-based capital as a percent of risk-weighted assets
14.3
13.7
15.8
15.4
Tier 1 capital as a percent of adjusted quarterly average assets (leverage ratio)
8.3
8.1
9.3
9.2
Tier 1 capital as a percent of total on- and off-balance sheet leverage exposure
(total leverage exposure ratio)
6.8
6.6
7.6
7.5
December 31, 2024
U.S. Banc
Minimum(a)
orp
Well-
Capitalized
Bank Regulatory Capital Requirements
Common equity tier 1 capital as a percent of risk-weighted assets
7.6 %
6.5 %
Tier 1 capital as a percent of risk-weighted assets
9.1
8.0
Total risk-based capital as a percent of risk-weighted assets
11.1
10.0
Tier 1 capital as a percent of adjusted quarterly average assets (leverage ratio)
4.0
5.0
Tier 1 capital as a percent of total on- and off-balance sheet leverage exposure
(total leverage exposure ratio)(b)
3.0
U.S. Bank National Association
Minimum(a)
Well-
Capitalized
7.0 %
8.5
10.5
4.0
6.5 %
8.0
10.0
5.0
3.0
3.0
(a) The minimum common equity tier 1 capital, tier 1 capital and total risk-based capital ratio requirements reflect a capital conservation buffer. Banks and financial services holding
companies must maintain minimum capital levels, including a capital conservation buffer, to avoid limitations on capital distributions and certain discretionary compensation
payments. At December 31, 2024, U.S. Bancorp had a capital conservation buffer requirement of 3.1 percent, resulting from the Federal Reserve’s stress capital buffer requirement
determined during its 2024 stress testing process, while U.S. Bank National Association had a capital conservation buffer requirement of 2.5 percent. U.S. Bancorp and U.S. Bank
National Association were both subject to a capital conservation buffer requirement of 2.5 percent at December 31, 2023.
(b) A minimum "well-capitalized" threshold does not apply to U.S. Bancorp for this ratio as it is not formally defined under applicable banking regulations for bank holding companies.
Noncontrolling interests principally represent third-party
The Series A Preferred Securities will be redeemable, in
investors’ interests in consolidated entities, including
whole or in part, at the option of USB Realty Corp. on each
preferred stock of consolidated subsidiaries. During 2006,
fifth anniversary after the dividend payment date occurring
the Company’s banking subsidiary formed USB Realty
in January 2012. Any redemption will be subject to the
Corp., a real estate investment trust, for the purpose of
approval of the Office of the Comptroller of the Currency
issuing 5,000 shares of Fixed-to-Floating Rate
(“OCC”). During 2016, the Company purchased 500 shares
Exchangeable Non-cumulative Perpetual Series A Preferred
of the Series A Preferred Securities held by third-party
Stock with a liquidation preference of $100,000 per share
investors. As of December 31, 2024, 4,500 shares of the
(“Series A Preferred Securities”) to third-party investors.
Series A Preferred Securities remain outstanding.
Dividends on the Series A Preferred Securities, if declared,
will accrue and be payable quarterly, in arrears, at a rate
per annum equal to 1.147 percent above three-month CME
Term SOFR plus a credit spread adjustment of 0.26161
percent. If USB Realty Corp. has not declared a dividend
on the Series A Preferred Securities before the dividend
payment date for any dividend period, such dividend shall
not be cumulative and shall cease to accrue and be
payable, and USB Realty Corp. will have no obligation to
pay dividends accrued for such dividend period, whether
or not dividends on the Series A Preferred Securities are
declared for any future dividend period.
102 U.S. Bancorp 2024 Annual Report
NOTE 15 Earnings Per Share
The components of earnings per share were:
Year Ended December 31
(Dollars and Shares in Millions, Except Per Share Data)
2024
2023
2022
Net income attributable to U.S. Bancorp
$
6,299 $
5,429 $
5,825
Preferred dividends
(352)
(350)
(296)
Earnings allocated to participating stock awards
(38)
(28)
(28)
Net income applicable to U.S. Bancorp common shareholders
$
5,909 $
5,051 $
5,501
Average common shares outstanding
1,560
1,543
1,489
Net effect of the exercise and assumed purchase of stock awards
1
—
1
Average diluted common shares outstanding
1,561
1,543
1,490
Earnings per common share
$
3.79 $
3.27 $
3.69
Diluted earnings per common share
$
3.79 $
3.27 $
3.69
Options outstanding at December 31, 2024, 2023 and 2022, to purchase 1 million, 3 million and 1 million common shares,
respectively, were not included in the computation of diluted earnings per share for the years ended December 31, 2024, 2023
and 2022, because they were antidilutive.
NOTE 16 Employee Benefits
Employee Retirement Savings Plan The Company has a
defined contribution retirement savings plan that covers
substantially all its employees. Qualified employees are
allowed to contribute up to 75 percent of their annual
compensation, subject to Internal Revenue Service limits,
through salary deductions under Section 401(k) of the
Internal Revenue Code. Employee contributions are
invested at their direction among a variety of investment
alternatives. Employee contributions are 100 percent
matched by the Company, up to four percent of each
employee’s eligible annual compensation. The Company’s
matching contribution vests immediately and is invested in
the same manner as each employee’s future contribution
elections. Total expense for the Company’s matching
contributions was $262 million, $254 million and $211
million in 2024, 2023 and 2022, respectively.
Pension and Postretirement Welfare Plans The Company
has tax qualified noncontributory defined benefit pension
plans, nonqualified pension plans and postretirement
welfare plans.
Pension Plans The funded tax qualified noncontributory
defined benefit pension plans provide benefits to
substantially all the Company’s employees. Participants
receive annual cash balance pay credits based on eligible
pay multiplied by a percentage determined by their age
and/or years of service, as defined by the plan documents.
Participants also receive an annual interest credit.
Generally, employees become vested upon completing
three years of vesting service. The Company did not
contribute to its qualified pension plans in 2024 and 2023
and does not expect to contribute to the plans in 2025.
The Company also maintains two non-qualified plans
that are unfunded and provide benefits to certain
employees. The assumptions used in computing the
accumulated benefit obligation, the projected benefit
obligation and net pension expense are substantially
consistent with those assumptions used for the funded
qualified plans. In 2025, the Company expects to contribute
approximately $49 million to its non-qualified pension plans,
which equals the 2025 expected benefit payments.
Postretirement Welfare Plans In addition to providing
pension benefits, the Company has a funded
postretirement welfare plan available to certain eligible
participants based on their hire or retirement date. The plan
is closed to new participants. In 2025, the Company does
not expect to contribute to its postretirement welfare plan.
103
The following table summarizes the changes in benefit obligations and plan assets for the years ended December 31, and the
funded status and amounts recognized in the Consolidated Balance Sheet at December 31 for the pension plans:
(Dollars in Millions)
2024
2023
Change In Projected Benefit Obligation(a)
Benefit obligation at beginning of measurement period
$
7,278 $
6,617
Service cost
219
223
Interest cost
376
370
Plan amendments
—
(23)
Actuarial (gain) loss
(443)
398
Lump sum settlements
(118)
(94)
Benefit payments
(243)
(213)
Benefit obligation at end of measurement period(b)
$
7,069 $
7,278
Change In Fair Value Of Plan Assets
Fair value at beginning of measurement period
$
7,779 $
7,375
Actual return on plan assets
381
658
Employer contributions
35
28
Lump sum settlements
(118)
(94)
Benefit payments
(243)
(213)
Acquisitions(c)
—
25
Fair value at end of measurement period
$
7,834 $
7,779
Funded Status
$
765 $
501
Components Of The Consolidated Balance Sheet
Noncurrent benefit asset
$
1,329 $
1,072
Current benefit liability
(48)
(26)
Noncurrent benefit liability
(516)
(545)
Recognized amount
$
765 $
501
Accumulated Other Comprehensive Income (Loss), Pretax
Net actuarial loss
$
(1,359) $
(1,607)
Net prior service credit
30
34
Recognized amount
$
(1,329) $
(1,573)
Note: At December 31, 2024 and 2023, the postretirement welfare plans projected benefit obligation was $41 million and $49 million, respectively, the fair value of plan assets was
$47 million and $45 million, respectively, and the amount recognized in accumulated other comprehensive income (loss), pretax was $51 million and $52 million, respectively.
(a) The decrease in the projected benefit obligation for 2024 was primarily due to a higher discount rate and the increase for 2023 was primarily due to a lower discount rate.
(b) At December 31, 2024 and 2023, the accumulated benefit obligation for all pension plans was $6.6 billion and $6.8 billion, respectively.
(c) The increase in 2023 plan assets was related to the 2022 MUB acquisition.
The following table provides information for pension plans with benefit obligations in excess of plan assets at December 31:
(Dollars in Millions)
2024
2023
Plans with Projected Benefit Obligations in Excess of Plan Assets
Projected benefit obligation
$
564 $
571
Fair value of plan assets
—
—
Plans with Accumulated Benefit Obligations in Excess of Plan Assets
Accumulated benefit obligation
$
525 $
530
Fair value of plan assets
—
—
104 U.S. Bancorp 2024 Annual Report
The following table sets forth the components of net periodic pension cost and other amounts recognized in accumulated other
comprehensive income (loss) for the years ended December 31 for the pension plans:
(Dollars in Millions)
2024
2023
2022
Components Of Net Periodic Pension Cost
Service cost
$
219 $
223 $
280
Interest cost
376
370
248
Expected return on plan assets
(585)
(546)
(481)
Prior service credit amortization
(4)
(1)
(2)
Actuarial loss amortization
9
5
140
Net periodic pension cost
$
15 $
51 $
185
Other Changes In Plan Assets And Benefit Obligations Recognized In Other
Comprehensive Income (Loss)
Net actuarial (loss) gain arising during the year
$
239 $
(286) $
523
Net actuarial loss amortized during the year
9
5
140
Net prior service credit (cost) arising during the year
—
23
(2)
Net prior service credit amortized during the year
(4)
(1)
(2)
Total recognized in other comprehensive income (loss)
$
244 $
(259) $
659
Total recognized in net periodic pension cost and other comprehensive income (loss)
$
229 $
(310) $
474
Note: The net periodic benefit for the postretirement welfare plans was $7 million, $10 million and $9 million for the years end December 31, 2024, 2023 and 2022, respectively. The
total of other amounts recognized as other comprehensive loss was $1 million, $10 million and $5 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The following table sets forth weighted-average assumptions used to determine the pension plans projected benefit obligations
at December 31:
2024
2023
Discount rate
5.77 %
5.12 %
Cash balance interest crediting rate
3.71
3.04
Rate of compensation increase(a)
3.52
3.72
(a) Determined on an active liability-weighted basis.
The following table sets forth weighted-average assumptions used to determine net periodic pension cost for the years ended
December 31:
2024
2023
2022
Discount rate
5.12 %
5.55 %
3.00 %
Cash balance interest crediting rate
3.04
3.36
3.00
Expected return on plan assets(a)
7.00
6.75
6.50
Rate of compensation increase(b)
3.72
4.13
3.56
(a) With the help of an independent pension consultant, the Company considers several sources when developing its expected long-term rates of return on plan assets assumptions,
including, but not limited to, past returns and estimates of future returns given the plans' asset allocation, economic conditions, and peer group long-term rate of return information.
The Company determines its expected long-term rates of return reflecting current economic conditions and plan assets.
(b) Determined on an active liability-weighted basis.
105
Investment Policies and Asset Allocation In establishing
its investment policies and asset allocation strategies, the
Company considers expected returns and the volatility
associated with different strategies. An independent
consultant performs modeling that projects numerous
outcomes using a broad range of possible scenarios,
including a mix of possible rates of inflation and economic
growth. Starting with current economic information, the
model bases its projections on past relationships between
inflation, fixed income rates and equity returns when these
types of economic conditions have existed over the
previous 30 years, both in the United States and in foreign
countries. Estimated future returns and other actuarially
determined adjustments are also considered in calculating
the estimated return on assets.
Generally, based on historical performance of the
various investment asset classes, investments in equities
have outperformed other investment classes but are
subject to higher volatility. In an effort to minimize volatility,
while recognizing the long-term up-side potential of
investing in equities, the Company’s Compensation and
Human Resources Committee has determined that a target
asset allocation of 35 percent long duration bonds, 30
percent global equities, 10 percent real assets, 10 percent
private equity funds, 5 percent domestic mid-small cap
equities, 5 percent emerging markets equities, and 5
percent hedge funds is appropriate.
At both December 31, 2024 and 2023, plan assets
included an asset management arrangement with a related
party totaling approximately $63 million.
In addition to cash and cash equivalents, the qualified
pension plans invest in funds that do not have readily
determinable fair values. These funds are valued based on
net asset values provided by the fund trustee or
administrator as a practical expedient.
The following table summarizes the pension plans investment assets at December 31:
(Dollars in Millions)
2024
2023
Cash and cash equivalents
$
63 $
68
Collective investment funds
Domestic equity securities
1,788
1,546
Mid-small cap equity securities
474
406
International equity securities
968
981
Real estate securities
171
142
Fixed income
1,958
2,295
Real estate funds(a)
733
746
Hedge funds(b)
354
412
Private equity funds(c)
1,325
1,183
Total plan investment assets at fair value
$
7,834 $
7,779
(a) This category consists of several investment strategies diversified across several real estate managers.
(b) This category consists of several investment strategies diversified across several hedge fund managers.
(c) This category consists of several investment strategies diversified across several private equity fund managers.
The following benefit payments are expected to be paid from the pension plans for the years ended December 31:
(Dollars in Millions)
2025
$
386
2026
394
2027
428
2028
451
2029
470
2030-2034
2,623
106 U.S. Bancorp 2024 Annual Report
NOTE 17 Stock-Based Compensation
As part of its employee and director compensation
programs, the Company currently may grant certain stock
awards under the provisions of its stock incentive plan. The
plan provides for grants of options to purchase shares of
common stock at a fixed price equal to the fair value of the
underlying stock at the date of grant. Option grants are
generally exercisable up to ten years from the date of grant.
In addition, the plan provides for grants of shares of
common stock or stock units that are subject to restriction
on transfer prior to vesting. Most stock and unit awards vest
over three to five years and are subject to forfeiture if
Stock Option Awards
certain vesting requirements are not met. Stock incentive
plans of acquired companies are generally terminated at
the merger closing dates. Participants under such plans
receive the Company’s common stock, options to buy the
Company’s common stock, or long term cash incentives,
based on the conversion terms of the various merger
agreements. At December 31, 2024, there were 46 million
shares (subject to adjustment for forfeitures) available for
grant under the Company’s stock incentive plan.
The following is a summary of stock options outstanding and exercised under prior and existing stock incentive plans of the
Company:
Year Ended December 31
Stock
Options/
Shares
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic Value
(in millions)
2024
Number outstanding at beginning of period
2,838,285 $
45.28
Exercised
(769,636)
42.04
Cancelled(a)
(20,402)
46.15
Number outstanding at end of period(b)
2,048,247 $
46.49
1.4 $
3
Exercisable at end of period
2,048,247 $
46.49
1.4 $
3
2023
Number outstanding at beginning of period
3,253,090 $
44.42
Exercised
(399,329)
38.15
Cancelled(a)
(15,476)
47.88
Number outstanding at end of period(b)
2,838,285 $
45.28
2.0 $
—
Exercisable at end of period
2,838,285 $
45.28
2.0 $
—
2022
Number outstanding at beginning of period
3,890,131 $
42.58
Exercised
(624,729)
32.87
Cancelled(a)
(12,312)
50.97
Number outstanding at end of period(b)
3,253,090 $
44.42
2.7 $
—
Exercisable at end of period
3,253,090 $
44.42
2.7 $
—
Note: The Company did not grant any stock option awards during 2024, 2023, and 2022.
(a) Options cancelled include both non-vested (i.e., forfeitures) and vested options.
(b) Outstanding options include stock-based awards that may be forfeited in future periods. The impact of the estimated forfeitures is reflected in compensation expense.
Stock-based compensation expense is based on the
including vesting provisions and trading limitations that
estimated fair value of the award at the date of grant or
impact their liquidity, the determined value used to
modification. The fair value of each option award is
measure compensation expense may vary from the actual
estimated on the date of grant using the Black-Scholes
fair value of the employee stock options. To satisfy option
option-pricing model, requiring the use of subjective
exercises, the Company predominantly uses treasury stock.
assumptions. Because employee stock options have
characteristics that differ from those of traded options,
107
The following summarizes certain stock option activity of the Company:
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Fair value of options vested
$
— $
— $
—
Intrinsic value of options exercised
3
2
15
Cash received from options exercised
32
15
21
Tax benefit realized from options exercised
1
1
4
Additional information regarding stock options outstanding as of December 31, 2024, is as follows:
Outstanding Options
Exercisable Options
Weighted-
Average
Weighted-
Weighted-
Remaining
Average
Average
Contractual
Exercise
Exercise
Range of Exercise Prices
Shares
Life (Years)
Price
Shares
Price
$35.01—$40.00
915,364
1.1 $
39.49
915,364 $
39.49
$40.01—$45.00
299,092
0.1
44.30
299,092
44.30
$45.01—$50.00
—
—
—
—
—
$50.01—$55.01
833,791
2.1
54.96
833,791
54.96
2,048,247
1.4 $
46.49
2,048,247 $
46.49
Restricted Stock and Unit Awards
A summary of the status of the Company’s restricted shares of stock and unit awards is presented below:
2024
2023
2022
Weighted-
Weighted-
Weighted-
Average Grant-
Average Grant-
Average Grant-
Year Ended December 31
Shares Date Fair Value
Shares Date Fair Value
Shares Date Fair Value
Outstanding at beginning of period
8,316,571 $
48.42
6,880,826 $
52.59
6,812,753 $
51.04
Granted
6,107,976
42.12
5,565,634
45.87
4,109,793
55.62
Vested
(4,680,480)
48.52
(3,872,874)
52.05
(3,690,666)
52.88
Cancelled
(502,680)
44.06
(257,015)
50.00
(351,054)
54.95
Outstanding at end of period
9,241,387 $
44.45
8,316,571 $
48.42
6,880,826 $
52.59
The total fair value of shares vested was $208 million,
$180 million and $198 million for the years ended
December 31, 2024, 2023 and 2022, respectively. Stock-
based compensation expense was $232 million, $224
million and $202 million for the years ended December 31,
2024, 2023 and 2022, respectively. On an after-tax basis,
stock-based compensation was $173 million, $167 million
and $152 million for the years ended December 31, 2024,
2023 and 2022, respectively. As of December 31, 2024,
there was $169 million of total unrecognized compensation
cost related to nonvested share-based arrangements
granted under the plans. That cost is expected to be
recognized over a weighted-average period of 1.8 years as
compensation expense.
108 U.S. Bancorp 2024 Annual Report
Income Taxes
The components of income tax expense were:
Year Ended December 31 (Dollars in Millions)
Federal
2024
2023
2022
Current
Deferred
Federal income tax
State
$
1,272 $
(6)
1,266
1,434 $
(326)
1,108
1,366
(108)
1,258
Current
Deferred
State income tax
Total income tax provision
$
279
35
314
1,580 $
482
(183)
299
1,407 $
401
(196)
205
1,463
NOTE 18
A reconciliation of expected income tax expense at the federal statutory rate of 21 percent to the Company’s applicable income
tax expense follows:
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Tax at statutory rate
$
1,661 $
1,442 $
1,533
State income tax, at statutory rates, net of federal tax benefit
385
322
305
Tax effect of
Tax credits and benefits, net of related expenses
(393)
(272)
(273)
Tax-exempt income
(144)
(142)
(121)
Exam Resolutions
(106)
(35)
—
Revaluation of tax related assets and liabilities(a)
(8)
15
(79)
Nondeductible legal and regulatory expenses
57
76
37
Other items
128
1
61
Applicable income taxes
$
1,580 $
1,407 $
1,463
(a) The 2022 acquisition of MUB resulted in an increase in the Company’s state effective tax rate, requiring the Company to revalue its state deferred tax assets and liabilities. As a
result of this revaluation, the Company recorded an estimated net tax benefit of $79 million during 2022.
The tax effects of fair value adjustments on securities
interpretations of these complex laws, regulations and
available-for-sale, derivative instruments in cash flow
methods. Due to the nature of the examination process, it
hedges, foreign currency translation adjustments, and
generally takes years before these examinations are
pension and post-retirement plans are recorded directly to
completed and matters are resolved. Federal tax
shareholders’ equity as part of other comprehensive
examinations for all years ending through December 31,
income (loss).
2020 are completed and resolved. The Company’s tax
In preparing its tax returns, the Company is required to
returns for the years ended December 31, 2021 through
interpret complex tax laws and regulations and utilize
December 31, 2022 are under examination by the Internal
income and cost allocation methods to determine its
Revenue Service. The years open to examination by
taxable income. On an ongoing basis, the Company is
foreign, state and local government authorities vary by
subject to examinations by federal, state, local and foreign
jurisdiction.
taxing authorities that may give rise to differing
A reconciliation of the changes in the federal, state and foreign uncertain tax position balances are summarized as follows:
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Balance at beginning of period
$
350 $
513 $
487
Additions for tax positions taken in prior years
32
141
35
Additions for tax positions taken in the current year
6
3
3
Exam resolutions
(131)
(302)
(8)
Statute expirations
(1)
(5)
(4)
Balance at end of period
$
256 $
350 $
513
109
The total amount of uncertain tax positions that, if
2023 and 2022 the Company recorded approximately $(13)
recognized, would impact the effective income tax rate as
million, $(11) million and $7 million, respectively, in interest
of December 31, 2024, 2023 and 2022, were $206 million,
and penalties on uncertain tax positions.
$276 million and $294 million, respectively. The Company
Deferred income tax assets and liabilities reflect the tax
classifies interest and penalties related to uncertain tax
effect of estimated temporary differences between the
positions as a component of income tax expense. At
carrying amounts of assets and liabilities for financial
December 31, 2024, the Company’s uncertain tax position
reporting purposes and the amounts used for the same
balance included $27 million of accrued interest and
items for income tax reporting purposes.
penalties. During the years ended December 31, 2024,
The significant components of the Company’s net deferred tax asset (liability) follows:
At December 31 (Dollars in Millions)
2024
2023
Deferred Tax Assets
Securities available-for-sale and financial instruments
$
3,129 $
3,231
Federal, state and foreign net operating loss, credit carryforwards and other carryforwards
2,772
2,836
Allowance for credit losses
2,086
2,051
Loans
869
1,013
Accrued expenses
767
838
Obligation for operating leases
341
348
Partnerships and other investment assets
264
271
Stock compensation
89
87
Other deferred tax assets, net
383
370
Gross deferred tax assets
10,700
11,045
Deferred Tax Liabilities
Goodwill and other intangible assets
(1,362)
(1,450)
Leasing activities
(1,273)
(1,455)
Mortgage servicing rights
(789)
(758)
Right of use operating leases
(297)
(301)
Pension and postretirement benefits
(184)
(115)
Fixed assets
(28)
(44)
Other deferred tax liabilities, net
(125)
(168)
Gross deferred tax liabilities
(4,058)
(4,291)
Valuation allowance
(389)
(364)
Net Deferred Tax Asset
$
6,253 $
6,390
The Company has approximately $3.0 billion of federal,
state and foreign net operating loss carryforwards which
expire at various times beginning in 2025. A substantial
portion of these carryforwards relate to state-only net
operating losses, for which the related deferred tax asset is
subject to a full valuation allowance as the carryforwards
are not expected to be realized within the carryforward
period. Management has determined it is more likely than
not the other net deferred tax assets could be realized
through carry back to taxable income in prior years, future
reversals of existing taxable temporary differences and
future taxable income.
In addition, the Company has $1.2 billion of federal
credit carryforwards which expire at various times through
2044 which are not subject to a valuation allowance as
management believes that it is more likely than not that the
credits will be utilized within the carryforward period.
At December 31, 2024, retained earnings included
approximately $102 million of base year reserves of
acquired thrift institutions, for which no deferred federal
income tax liability has been recognized. These base year
reserves would be recaptured if certain subsidiaries of the
Company cease to qualify as a bank for federal income tax
purposes. The base year reserves also remain subject to
income tax penalty provisions that, in general, require
recapture upon certain stock redemptions of, and excess
distributions to, stockholders.
110 U.S. Bancorp 2024 Annual Report
NOTE 19 Derivative Instruments
In the ordinary course of business, the Company enters into
derivative transactions to manage various risks and to
accommodate the business requirements of its customers.
The Company recognizes all derivatives on the
Consolidated Balance Sheet at fair value in other assets or
in other liabilities. On the date the Company enters into a
derivative contract, the derivative is designated as either a
fair value hedge, cash flow hedge, net investment hedge,
or a designation is not made as it is a customer-related
transaction, an economic hedge for asset/liability risk
management purposes or another stand-alone derivative
created through the Company’s operations (“free-standing
derivative”). When a derivative is designated as a fair value,
cash flow or net investment hedge, the Company performs
an assessment, at inception and, at a minimum, quarterly
thereafter, to determine the effectiveness of the derivative in
offsetting changes in the value or cash flows of the hedged
item(s).
Fair Value Hedges These derivatives are interest rate
swaps the Company uses to hedge the change in fair value
related to interest rate changes of its underlying available-
for-sale investment securities and fixed-rate debt. Changes
in the fair value of derivatives designated as fair value
hedges, and changes in the fair value of the hedged items,
are recorded in earnings.
Cash Flow Hedges These derivatives are interest rate
swaps the Company uses to hedge the forecasted cash
flows from its underlying variable-rate loans and debt.
Changes in the fair value of derivatives designated as cash
flow hedges are recorded in other comprehensive income
(loss) until the cash flows of the hedged items are realized.
If a derivative designated as a cash flow hedge is
terminated or ceases to be highly effective, the gain or loss
in other comprehensive income (loss) is amortized to
earnings over the period the forecasted hedged
transactions impact earnings. If a hedged forecasted
transaction is no longer probable, hedge accounting is
ceased and any gain or loss included in other
comprehensive income (loss) is reported in earnings
immediately, unless the forecasted transaction is at least
reasonably possible of occurring, whereby the amounts
remain within other comprehensive income (loss). At
December 31, 2024, the Company had $553 million (net-of-
tax) of realized and unrealized losses on derivatives
classified as cash flow hedges recorded in other
comprehensive income (loss), compared with $242 million
(net-of-tax) of realized and unrealized losses at
December 31, 2023. The estimated amount to be
reclassified from other comprehensive income (loss) into
earnings during the next 12 months is a loss of $222 million
(net-of-tax). All cash flow hedges were highly effective for
the year ended December 31, 2024.
Net Investment Hedges The Company uses forward
commitments to sell specified amounts of certain foreign
currencies, and non-derivative debt instruments, to hedge
the volatility of its net investment in foreign operations
driven by fluctuations in foreign currency exchange rates.
The carrying amount of non-derivative debt instruments
designated as net investment hedges was $1.3 billion at
December 31, 2024 and December 31, 2023.
Other Derivative Positions The Company enters into free-
standing derivatives to mitigate interest rate risk and for
other risk management purposes. These derivatives include
forward commitments to sell TBAs and other commitments
to sell residential mortgage loans, which are used to
economically hedge the interest rate risk related to MLHFS
and unfunded mortgage loan commitments. The Company
also enters into interest rate swaps, swaptions, forward
commitments to buy TBAs, U.S. Treasury and Eurodollar
futures and options on U.S. Treasury futures to
economically hedge the change in the fair value of the
Company’s MSRs. The Company enters into foreign
currency forwards to economically hedge remeasurement
gains and losses the Company recognizes on foreign
currency denominated assets and liabilities. The Company
also enters into interest rate swaps as economic hedges of
fair value option elected deposits and long-term debt. In
addition, the Company acts as a seller and buyer of interest
rate, foreign exchange and commodity contracts for its
customers. The Company mitigates the market, funding
and liquidity risk associated with these customer
derivatives by entering into similar offsetting positions with
broker-dealers, or on a portfolio basis by entering into other
derivative or non-derivative financial instruments that
partially or fully offset the exposure to earnings from these
customer-related positions. The Company’s customer
derivatives and related hedges are monitored and reviewed
by the Company’s Market Risk Committee, which
establishes policies for market risk management, including
exposure limits for each portfolio. The Company also has
derivative contracts that are created through its operations,
including certain unfunded mortgage loan commitments
and swap agreements related to the sale of a portion of its
Class B common and preferred shares of Visa Inc. Refer to
Note 22 for further information on these swap agreements.
The Company uses credit derivatives to economically
hedge the credit risk on its derivative positions and loan
portfolios.
111
The following table summarizes the asset and liability management derivative positions of the Company at December 31:
2024
2023
Fair Value
Fair Value
Notional
Notional
(Dollars in Millions)
Value
Assets
Liabilities
Value
Assets
Liabilities
Fair value hedges
Interest rate contracts
Receive fixed/pay floating swaps
$
10,600 $
— $
— $
12,100 $
— $
16
Pay fixed/receive floating swaps
29,739
—
—
24,139
—
—
Cash flow hedges
Interest rate contracts
Receive fixed/pay floating swaps
28,550
—
—
18,400
—
—
Net investment hedges
Foreign exchange forward contracts
870
7
—
854
—
10
Other economic hedges
Interest rate contracts
Futures and forwards
Buy
5,436
8
30
5,006
29
5
Sell
2,711
10
1
4,501
7
34
Options
Purchased
7,810
186
—
6,085
237
—
Written
1,991
8
47
3,696
14
75
Receive fixed/pay floating swaps
9,977
45
23
7,029
9
3
Pay fixed/receive floating swaps
2,371
—
—
3,801
—
—
Foreign exchange forward contracts
702
4
4
734
2
5
Equity contracts
293
—
9
227
2
—
Credit contracts
3,558
—
29
2,620
1
—
Other (a)
1,084
7
78
2,136
11
93
Total
$ 105,692 $
275 $
221 $
91,328 $
312 $
241
(a) Includes derivative liability swap agreements related to the sale of a portion of the Company’s Class B common and preferred shares of Visa Inc. The Visa swap agreements had
a total notional value and fair value of $1.0 billion and $78 million at December 31, 2024, respectively, compared to $2.0 billion and $91 million at December 31, 2023,
respectively. In addition, includes short-term underwriting purchase and sale commitments with total notional value of $28 million at December 31, 2023.
112 U.S. Bancorp 2024 Annual Report
The following table summarizes the customer-related derivative positions of the Company at December 31:
2024
2023
Fair Value
Fair Value
Notional
Notional
(Dollars in Millions)
Value
Assets
Liabilities
Value
Assets
Liabilities
Interest rate contracts
Receive fixed/pay floating swaps
$ 413,841 $
462 $
4,485 $ 363,375 $
791 $
4,395
Pay fixed/receive floating swaps
363,837
2,342
153
330,539
1,817
280
Other(a)
72,503
17
34
82,209
17
51
Options
Purchased
96,238
414
2
102,423
1,026
18
Written
90,572
12
574
97,690
20
1,087
Foreign exchange rate contracts
Forwards, spots and swaps
113,718
2,441
2,232
121,119
2,252
1,942
Options
Purchased
497
14
—
1,532
28
—
Written
497
—
14
1,532
—
28
Commodity contracts
Swaps
8,224
199
180
2,498
116
110
Options
Purchased
3,921
233
2
1,936
151
—
Written
3,921
3
233
1,936
—
151
Futures
Buy
1
—
—
—
—
—
Sell
166
25
27
—
—
—
Credit contracts
13,670
—
3
13,053
1
6
Total
$1,181,606 $
6,162 $
7,939 $1,119,842 $
6,219 $
8,068
(a) Primarily represents floating rate interest rate swaps that pay based on differentials between specified interest rate indexes.
The table below shows the effective portion of the gains (losses) recognized in other comprehensive income (loss) and the gains
(losses) reclassified from other comprehensive income (loss) into earnings (net-of-tax) for the years ended December 31:
Gains (Losses) Recognized
Gains (Losses) Reclassified
in Other Comprehensive
from Other Comprehensive
Income (Loss)
Income (Loss) into Earnings
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
Asset and Liability Management Positions
Cash flow hedges
Interest rate contracts
$ (503) $ (187) $ (56) $ (192) $ (59) $ (27)
Net investment hedges
Foreign exchange forward contracts
121
(11)
42
—
—
—
Non-derivative debt instruments
85
(33)
59
—
—
—
Note: The Company does not exclude components from effectiveness testing for cash flow and net investment hedges.
113
The table below shows the effect of fair value and cash flow hedge accounting on the Consolidated Statement of Income for the
years ended December 31:
Interest Income
Interest Expense
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
Total amount of income and expense line items presented in the
Consolidated Statement of Income in which the effects of fair value
or cash flow hedges are recorded
Asset and Liability Management Positions
Fair value hedges
Interest rate contract derivatives
Hedged items
Cash flow hedges
Interest rate contract derivatives
$ 31,666 $ 30,007 $ 17,945 $ 15,377 $ 12,611 $
3,217
508
(430)
138
95
(458)
482
(508)
427
(139)
(98)
461
(486)
(230)
(52)
—
28
28
—
Note: The Company does not exclude components from effectiveness testing for fair value and cash flow hedges. The Company reclassified losses of $28 million, $28 million and $36
million into earnings during the years ended December 31, 2024, 2023 and 2022, respectively, as a result of realized cash flows on discontinued cash flow hedges. No amounts
were reclassified into earnings on discontinued cash flow hedges because it is probable the original hedged forecasted cash flows will not occur.
The table below shows cumulative hedging adjustments and the carrying amount of assets and liabilities currently designated in fair
value hedges at December 31:
Carrying Amount of
the Hedged Assets
Cumulative Hedging
and Liabilities
Adjustment
(Dollars in Millions)
2024
2023
2024
2023
Line Item in the Consolidated Balance Sheet
Available-for-sale investment securities(a)
$29,005 $23,924 $
(464) $
(93)
Long-term debt
10,632
12,034
39
(32)
Note: The table above excludes the cumulative hedging adjustment related to discontinued hedging relationships on available-for-sale investment securities and long-term debt of
$(72) million and $(149) million, respectively, at December 31, 2024, compared with $(18) million and $(116) million at December 31, 2023, respectively. The carrying amount of
available-for-sale investment securities and long-term debt related to discontinued hedging relationships was $6.8 billion and $14.9 billion, respectively, at December 31, 2024,
compared with $830 million and $7.2 billion at December 31, 2023, respectively.
(a)
Includes amounts related to available-for-sale investment securities currently designated as the hedged item in a fair value hedge using the portfolio layer method. At
December 31, 2024, the amortized cost of the closed portfolios used in these hedging relationships was $17.5 billion, of which $11.6 billion was designated as hedged. At
December 31, 2024, the cumulative amount of basis adjustments associated with these hedging relationships was $13 million. At December 31, 2023, the amortized cost of the
closed portfolios used in these hedging relationships was $15.6 billion, of which $9.6 billion was designated as hedged. At December 31, 2023, the cumulative amount of basis
adjustments associated with these hedging relationships was $335 million.
114 U.S. Bancorp 2024 Annual Report
The table below shows the gains (losses) recognized in earnings for other economic hedges and the customer-related positions for the
years ended December 31:
Location of Gains (Losses)
(Dollars in Millions)
Recognized in Earnings
2024
2023
2022
Asset and Liability Management Positions
Other economic hedges
Interest rate contracts
Futures and forwards
Mortgage banking revenue $
5 $
71 $
407
Purchased and written options
Mortgage banking revenue
195
89
1
Swaps
Mortgage banking revenue/Other
noninterest income/Interest expense
(201)
(19)
(1,010)
Foreign exchange forward contracts
Other noninterest income
23
(7)
(1)
Equity contracts
Compensation expense
(4)
(8)
(8)
Credit contracts
Commercial products revenue
(21)
—
—
Other
Other noninterest income
(147)
1
(181)
Customer-Related Positions
Interest rate contracts
Swaps
Commercial products revenue
280
185
98
Purchased and written options
Commercial products revenue
(58)
45
20
Futures
Commercial products revenue
—
(1)
30
Foreign exchange rate contracts
Forwards, spots and swaps
Commercial products revenue
215
195
100
Purchased and written options
Commercial products revenue
—
1
1
Commodity contracts
Swaps
Commercial products revenue
16
6
—
Purchased and written options
Commercial products revenue
6
—
—
Credit contracts
Commercial products revenue
(3)
1
20
Derivatives are subject to credit risk associated with
counterparties to the derivative contracts. The Company
measures that credit risk using a credit valuation
adjustment and includes it within the fair value of the
derivative. The Company manages counterparty credit risk
through diversification of its derivative positions among
various counterparties, by entering into derivative positions
that are centrally cleared through clearinghouses, by
entering into master netting arrangements and, where
possible, by requiring collateral arrangements. A master
netting arrangement allows two counterparties, who have
multiple derivative contracts with each other, the ability to
net settle amounts under all contracts, including any related
collateral, through a single payment and in a single
currency. Collateral arrangements generally require the
counterparty to deliver collateral (typically cash or U.S.
Treasury and agency securities) equal to the Company’s
net derivative receivable, subject to minimum transfer and
credit rating requirements.
The Company’s collateral arrangements are
predominately bilateral and, therefore, contain provisions
that require collateralization of the Company’s net liability
derivative positions. Required collateral coverage is based
on net liability thresholds and may be contingent upon the
Company’s credit rating from two of the nationally
recognized statistical rating organizations. If the Company’s
credit rating were to fall below credit ratings thresholds
established in the collateral arrangements, the
counterparties to the derivatives could request immediate
additional collateral coverage up to and including full
collateral coverage for derivatives in a net liability position.
The aggregate fair value of all derivatives under collateral
arrangements that were in a net liability position at
December 31, 2024, was $2.3 billion. At December 31,
2024, the Company had $1.9 billion of cash posted as
collateral against this net liability position.
115
NOTE 20 Netting Arrangements for Certain Financial Instruments and Securities
Financing Activities
The Company’s derivative portfolio consists of bilateral
over-the-counter trades, certain interest rate derivatives
and credit contracts required to be centrally cleared
through clearinghouses per current regulations, and
exchange-traded positions which may include U.S.
Treasury and Eurodollar futures or options on U.S. Treasury
futures. Of the Company’s $1.3 trillion total notional amount
of derivative positions at December 31, 2024, $576.7 billion
related to bilateral over-the-counter trades, $709.5 billion
related to those centrally cleared through clearinghouses
and $1.2 billion related to those that were exchange-traded.
The Company’s derivative contracts typically include
offsetting rights (referred to as netting arrangements), and
depending on expected volume, credit risk, and
counterparty preference, collateral maintenance may be
required. For all derivatives under collateral support
arrangements, fair value is determined daily and,
depending on the collateral maintenance requirements, the
Company and a counterparty may receive or deliver
collateral, based upon the net fair value of all derivative
positions between the Company and the counterparty.
Collateral is typically cash, but securities may be allowed
under collateral arrangements with certain counterparties.
Receivables and payables related to cash collateral are
included in other assets and other liabilities on the
Consolidated Balance Sheet, along with the related
derivative asset and liability fair values. Any securities
pledged to counterparties as collateral remain on the
Consolidated Balance Sheet. Securities received from
counterparties as collateral are not recognized on the
Consolidated Balance Sheet, unless the counterparty
defaults. In general, securities used as collateral can be
sold, repledged or otherwise used by the party in
possession. No restrictions exist on the use of cash
collateral by either party. Refer to Note 19 for further
discussion of the Company’s derivatives, including
collateral arrangements.
As part of the Company’s treasury and broker-dealer
operations, the Company executes transactions that are
treated as securities sold under agreements to repurchase
or securities purchased under agreements to resell, both of
which are accounted for as collateralized financings.
Securities sold under agreements to repurchase include
repurchase agreements and securities loaned transactions.
Securities purchased under agreements to resell include
reverse repurchase agreements and securities borrowed
transactions. For securities sold under agreements to
repurchase, the Company records a liability for the cash
received, which is included in short-term borrowings on the
Consolidated Balance Sheet. For securities purchased
under agreements to resell, the Company records a
receivable for the cash paid, which is included in other
assets on the Consolidated Balance Sheet.
Securities transferred to counterparties under
repurchase agreements and securities loaned transactions
continue to be recognized on the Consolidated Balance
Sheet, are measured at fair value, and are included in
investment securities or other assets. Securities received
from counterparties under reverse repurchase agreements
and securities borrowed transactions are not recognized on
the Consolidated Balance Sheet unless the counterparty
defaults. The securities transferred under repurchase and
reverse repurchase transactions typically are U.S. Treasury
and agency securities, residential agency mortgage-
backed securities, corporate debt securities or asset-
backed securities. The securities loaned or borrowed
typically are corporate debt securities traded by the
Company’s primary broker-dealer subsidiary. In general,
the securities transferred can be sold, repledged or
otherwise used by the party in possession. No restrictions
exist on the use of cash collateral by either party.
Repurchase/reverse repurchase and securities loaned/
borrowed transactions expose the Company to
counterparty risk. The Company manages this risk by
performing assessments, independent of business line
managers, and establishing concentration limits on each
counterparty. Additionally, these transactions include
collateral arrangements that require the fair values of the
underlying securities to be determined daily, resulting in
cash being obtained from or refunded to counterparties to
maintain specified collateral levels.
116 U.S. Bancorp 2024 Annual Report
The following table summarizes the maturities by category of collateral pledged for repurchase agreements and securities
loaned transactions:
Overnight and
Less Than 30
Greater Than
(Dollars in Millions)
Continuous
Days
30-89 Days
90 Days
Total
December 31, 2024
Repurchase agreements
U.S. Treasury and agencies
$
5,918 $
— $
— $
— $
5,918
Residential agency mortgage-backed securities
319
—
—
—
319
Corporate debt securities
1,116
—
—
—
1,116
Asset-backed securities
270
22
—
—
292
Total repurchase agreements
7,623
22
—
—
7,645
Securities loaned
Corporate debt securities
90
—
—
—
90
Total securities loaned
90
—
—
—
90
Gross amount of recognized liabilities
$
7,713 $
22 $
— $
— $
7,735
December 31, 2023
Repurchase agreements
U.S. Treasury and agencies
$
2,375 $
— $
— $
— $
2,375
Residential agency mortgage-backed securities
338
—
—
—
338
Corporate debt securities
821
—
—
—
821
Asset-backed securities
—
45
—
—
45
Total repurchase agreements
3,534
45
—
—
3,579
Securities loaned
Corporate debt securities
290
—
—
—
290
Total securities loaned
290
—
—
—
290
Gross amount of recognized liabilities
$
3,824 $
45 $
— $
— $
3,869
The Company executes its derivative, repurchase/
reverse repurchase and securities loaned/borrowed
transactions under the respective industry standard
agreements. These agreements include master netting
arrangements that allow for multiple contracts executed
with the same counterparty to be viewed as a single
arrangement. This allows for net settlement of a single
amount on a daily basis. In the event of default, the master
netting arrangement provides for close-out netting, which
allows all of these positions with the defaulting counterparty
to be terminated and net settled with a single payment
amount.
The Company has elected to offset the assets and
liabilities under netting arrangements for the balance sheet
presentation of the majority of its derivative counterparties.
The netting occurs at the counterparty level, and includes
all assets and liabilities related to the derivative contracts,
including those associated with cash collateral received or
delivered. The Company has not elected to offset the
assets and liabilities under netting arrangements for the
balance sheet presentation of repurchase/reverse
repurchase and securities loaned/borrowed transactions.
117
The following tables provide information on the Company’s netting adjustments, and items not offset on the Consolidated
Balance Sheet but available for offset in the event of default:
Gross Amounts Not Offset on the
Gross
Gross Amounts
Offset on the
Net Amounts
Presented on the
Consolidated Balance Sheet
(Dollars in Millions)
Recognized
Assets
Consolidated
Balance Sheet(a)
Consolidated
Balance Sheet
Financial
Instruments(b)
Collateral
Received(c)
Net Amount
December 31, 2024
Derivative assets(d)
$
6,422 $
(2,979) $
3,443 $
(177) $
(5) $
3,261
Reverse repurchase agreements
6,383
—
6,383
(851)
(5,508)
24
Securities borrowed
1,516
—
1,516
—
(1,453)
63
Total
$
14,321 $
(2,979) $
11,342 $
(1,028) $
(6,966) $
3,348
December 31, 2023
Derivative assets(d)
$
6,504 $
(3,666) $
2,838 $
(141) $
(3) $
2,694
Reverse repurchase agreements
2,513
—
2,513
(568)
(1,941)
4
Securities borrowed
1,802
—
1,802
(14)
(1,717)
71
Total
$
10,819 $
(3,666) $
7,153 $
(723) $
(3,661) $
2,769
(a) Includes $1.9 billion and $1.6 billion of cash collateral related payables that were netted against derivative assets at December 31, 2024 and 2023, respectively.
(b) For derivative assets this includes any derivative liability fair values that could be offset in the event of counterparty default; for reverse repurchase agreements this includes any
repurchase agreement payables that could be offset in the event of counterparty default; for securities borrowed this includes any securities loaned payables that could be offset in
the event of counterparty default.
(c) Includes the fair value of securities received by the Company from the counterparty. These securities are not included on the Consolidated Balance Sheet unless the counterparty
defaults.
(d) Excludes $15 million and $27 million at December 31, 2024 and 2023, respectively, of derivative assets not subject to netting arrangements.
Gross Amounts Not Offset on the
Gross
Gross Amounts
Offset on the
Net Amounts
Presented on the
Consolidated Balance Sheet
(Dollars in Millions)
Recognized
Liabilities
Consolidated
Balance Sheet(a)
Consolidated
Balance Sheet
Financial
Instruments(b)
Collateral
Pledged(c)
Net Amount
December 31, 2024
Derivative liabilities(d)
$
8,081 $
(2,949) $
5,132 $
(177) $
— $
4,955
Repurchase agreements
7,645
—
7,645
(851)
(6,787)
7
Securities loaned
90
—
90
—
(88)
2
Total
$
15,816 $
(2,949) $
12,867 $
(1,028) $
(6,875) $
4,964
December 31, 2023
Derivative liabilities(d)
$
8,217 $
(3,720) $
4,497 $
(141) $
— $
4,356
Repurchase agreements
3,579
—
3,579
(568)
(3,008)
3
Securities loaned
290
—
290
(14)
(270)
6
Total
$
12,086 $
(3,720) $
8,366 $
(723) $
(3,278) $
4,365
(a) Includes $1.9 billion and $1.7 billion of cash collateral related receivables that were netted against derivative liabilities at December 31, 2024 and 2023, respectively.
(b) For derivative liabilities this includes any derivative asset fair values that could be offset in the event of counterparty default; for repurchase agreements this includes any reverse
repurchase agreement receivables that could be offset in the event of counterparty default; for securities loaned this includes any securities borrowed receivables that could be
offset in the event of counterparty default.
(c) Includes the fair value of securities pledged by the Company to the counterparty. These securities are included on the Consolidated Balance Sheet unless the Company defaults.
(d) Excludes $79 million and $92 million at December 31, 2024 and 2023, respectively, of derivative liabilities not subject to netting arrangements.
118 U.S. Bancorp 2024 Annual Report
NOTE 21 Fair Values of Assets and Liabilities
The Company uses fair value measurements for the initial
recording of certain assets and liabilities, periodic
remeasurement of certain assets and liabilities, and
disclosures. Derivatives, trading and available-for-sale
investment securities, MSRs, certain time deposits and
structured long-term notes, and substantially all MLHFS are
recorded at fair value on a recurring basis. Additionally,
from time to time, the Company may be required to record
at fair value other assets on a nonrecurring basis, such as
loans held for sale, loans held for investment and certain
other assets. These nonrecurring fair value adjustments
typically involve application of lower-of-cost-or-fair value
accounting or impairment write-downs of individual assets.
Other financial instruments, such as held-to-maturity
investment securities, loans, the majority of time deposits,
short-term borrowings and long-term debt, are accounted
for at amortized cost. See “Fair Value of Financial
Instruments” in this Note for further information on the
estimated fair value of these other financial instruments. In
accordance with disclosure guidance, certain financial
instruments, such as deposits with no defined or
contractual maturity, receivables and payables due in one
year or less, insurance contracts and equity investments
not accounted for at fair value, are excluded from this Note.
Fair value is defined as the exchange price that would
be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between
market participants on the measurement date. A fair value
measurement reflects all of the assumptions that market
participants would use in pricing the asset or liability,
including assumptions about the risk inherent in a particular
valuation technique, the effect of a restriction on the sale or
use of an asset and the risk of nonperformance.
The Company groups its assets and liabilities
measured at fair value into a three-level hierarchy for
valuation techniques used to measure financial assets and
financial liabilities at fair value. This hierarchy is based on
whether the valuation inputs are observable or
unobservable. These levels are:
• Level 1 — Quoted prices in active markets for identical
assets or liabilities. Level 1 includes U.S. Treasury
securities, as well as exchange-traded instruments.
• Level 2 — Observable inputs other than Level 1 prices,
such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by
observable market data for substantially the full term of
the assets or liabilities. Level 2 includes debt securities
that are traded less frequently than exchange-traded
instruments and which are typically valued using third
party pricing services; derivative contracts and other
assets and liabilities, including securities, and certain
time deposits, and structured long-term notes, whose
value is determined using a pricing model with inputs
that are observable in the market or can be derived
principally from or corroborated by observable market
data; and MLHFS whose values are determined using
quoted prices for similar assets or pricing models with
inputs that are observable in the market or can be
corroborated by observable market data.
• Level 3 — Unobservable inputs that are supported by
little or no market activity and that are significant to the
fair value of the assets or liabilities. Level 3 assets and
liabilities include financial instruments whose values are
determined using pricing models, discounted cash flow
methodologies, or similar techniques, as well as
instruments for which the determination of fair value
requires significant management judgment or estimation.
This category includes MSRs and certain derivative
contracts.
Valuation Methodologies
The valuation methodologies used by the Company to
measure financial assets and liabilities at fair value are
described below. In addition, the following section includes
an indication of the level of the fair value hierarchy in which
the assets or liabilities are classified. Where appropriate,
the descriptions include information about the valuation
models and key inputs to those models. During the years
ended December 31, 2024, 2023 and 2022, there were no
significant changes to the valuation techniques used by the
Company to measure fair value.
Available-for-Sale Investment Securities When quoted
market prices for identical securities are available in an
active market, these prices are used to determine fair value
and these securities are classified within Level 1 of the fair
value hierarchy. Level 1 investment securities include U.S.
Treasury and exchange-traded securities.
For other securities, quoted market prices may not be
readily available for the specific securities. When possible,
the Company determines fair value based on market
observable information, including quoted market prices for
similar securities, inactive transaction prices, and broker
quotes. These securities are classified within Level 2 of the
fair value hierarchy. Level 2 valuations are generally
provided by a third-party pricing service. Level 2
investment securities are predominantly agency mortgage-
backed securities, certain other asset-backed securities,
obligations of state and political subdivisions and agency
debt securities.
Mortgage Loans Held For Sale MLHFS measured at fair
value, for which an active secondary market and readily
available market prices exist, are initially valued at the
transaction price and are subsequently valued by
comparison to instruments with similar collateral and risk
profiles. MLHFS are classified within Level 2. Included in
mortgage banking revenue were net losses of $15 million,
$46 million and $450 million for the years ended
December 31, 2024, 2023 and 2022, respectively, from the
changes to fair value of these MLHFS under fair value
option accounting guidance. Changes in fair value due to
instrument specific credit risk were immaterial. Interest
119
income for MLHFS is measured based on contractual
interest rates and reported as interest income on the
Consolidated Statement of Income. Electing to measure
MLHFS at fair value reduces certain timing differences and
better matches changes in fair value of these assets with
changes in the value of the derivative instruments used to
economically hedge them without the burden of complying
with the requirements for hedge accounting.
Time Deposits The Company elects the fair value option to
account for certain time deposits that are hedged with
derivatives that do not qualify for hedge accounting.
Electing to measure these time deposits at fair value
reduces certain timing differences and better matches
changes in fair value of these deposits with changes in the
value of the derivative instruments used to economically
hedge them. The time deposits measured at fair value are
valued using a discounted cash flow model that utilizes
market observable inputs and are classified within Level 2.
Included in interest expense on deposits were net gains of
$4 million for both the years ended December 31, 2024 and
2023, from the changes in fair value of time deposits under
fair value option accounting guidance.
Long-term Debt The Company elects the fair value option
to account for certain structured notes that are hedged with
derivatives that do not qualify for hedge accounting.
Electing to measure these structured notes at fair value
reduces certain timing differences and better matches
changes in fair value of these notes with changes in the
value of the derivative instruments use to economically
hedge them. The structured notes measured at fair value
are valued using a discounted cash flow model that utilizes
market observable inputs and are classified within Level 2.
The discount rate used in the discounted cash flow model
incorporates the impact of the Company's credit spread,
which is based on observable spreads in the secondary
bond market. Changes in fair value attributable to
instrument specific credit risk are recorded as debit
valuation adjustments (“DVA”) in other comprehensive
income (loss) with all other changes in fair value recorded
in interest expense. Included in other comprehensive
income (loss) and interest expense on long-term debt were
net DVA gains of $1 million and net gains of $17 million,
respectively, for the year ended December 31, 2024 from
the changes in fair value of structured notes under fair
value option account guidance.
Mortgage Servicing Rights MSRs are valued using a
discounted cash flow methodology, and are classified
within Level 3. The Company determines fair value of the
MSRs by projecting future cash flows for different interest
rate scenarios using prepayment rates and other
assumptions, and discounts these cash flows using a risk
adjusted rate based on option adjusted spread levels.
There is minimal observable market activity for MSRs on
comparable portfolios and, therefore, the determination of
fair value requires significant management judgment. Refer
to Note 9 for further information on MSR valuation
assumptions.
Derivatives The majority of derivatives held by the
Company are executed over-the-counter or centrally
cleared through clearinghouses and are valued using
market standard cash flow valuation techniques. The
models incorporate inputs, depending on the type of
derivative, including interest rate curves, foreign exchange
rates and volatility. All derivative values incorporate an
assessment of the risk of counterparty nonperformance,
measured based on the Company’s evaluation of credit risk
including external assessments of credit risk. The Company
monitors and manages its nonperformance risk by
considering its ability to net derivative positions under
master netting arrangements, as well as collateral received
or provided under collateral arrangements. Accordingly,
the Company has elected to measure the fair value of
derivatives, at a counterparty level, on a net basis. The
majority of the derivatives are classified within Level 2 of the
fair value hierarchy, as the significant inputs to the models,
including nonperformance risk, are observable. However,
certain derivative transactions are with counterparties
where risk of nonperformance cannot be observed in the
market and, therefore, the credit valuation adjustments
result in these derivatives being classified within Level 3 of
the fair value hierarchy.
The Company also has other derivative contracts that
are created through its operations, including commitments
to purchase and originate mortgage loans and swap
agreements executed in conjunction with the sale of a
portion of its Class B common and preferred shares of Visa
Inc. (the “Visa swaps”). The mortgage loan commitments
are valued by pricing models that include market
observable and unobservable inputs, which result in the
commitments being classified within Level 3 of the fair
value hierarchy. The unobservable inputs include
assumptions about the percentage of commitments that
actually become a closed loan and the MSR value that is
inherent in the underlying loan value. The Visa swaps
require payments by either the Company or the purchaser
of the Visa Inc. Class B common and preferred shares
when there are changes in the conversion rate of the Visa
Inc. Class B common and preferred shares to Visa Inc.
Class A common and preferred shares, respectively, as
well as quarterly payments to the purchaser based on
specified terms of the agreements. Management reviews
and updates the Visa swaps fair value in conjunction with
its review of Visa Inc. related litigation contingencies, and
the associated escrow funding. The expected litigation
resolution impacts the Visa Inc. Class B common share to
Visa Inc. Class A common share conversion rate, as well as
the ultimate termination date for the Visa swaps.
Accordingly, the Visa swaps are classified within Level 3.
Refer to Note 22 for further information on the Visa Inc.
restructuring and related card association litigation.
120 U.S. Bancorp 2024 Annual Report
Significant Unobservable Inputs of
Level 3 Assets and Liabilities
The following section provides information to facilitate an
understanding of the uncertainty in the fair value
measurements for the Company’s Level 3 assets and
liabilities recorded at fair value on the Consolidated
Balance Sheet. This section includes a description of the
significant inputs used by the Company and a description
of any interrelationships between these inputs. The
discussion below excludes nonrecurring fair value
measurements of collateral value used for impairment
measures for loans and OREO. These valuations utilize
third party appraisal or broker price opinions, and are
classified as Level 3 due to the significant judgment
involved.
Mortgage Servicing Rights The significant unobservable
inputs used in the fair value measurement of the
Company’s MSRs are expected prepayments and the
option adjusted spread that is added to the risk-free rate to
discount projected cash flows. Significant increases in
either of these inputs in isolation would have resulted in a
significantly lower fair value measurement. Significant
decreases in either of these inputs in isolation would have
resulted in a significantly higher fair value measurement.
There is no direct interrelationship between prepayments
and option adjusted spread. Prepayment rates generally
move in the opposite direction of market interest rates.
Option adjusted spread is generally impacted by changes
in market return requirements.
The following table shows the significant valuation assumption ranges for MSRs at December 31, 2024:
Minimum
Maximum
Weighted-
Average(a)
Expected prepayment
6 %
18 %
9 %
Option adjusted spread
5
11
6
(a) Determined based on the relative fair value of the related mortgage loans serviced.
Derivatives The Company has two distinct Level 3
derivative portfolios: (i) the Company’s commitments to
purchase and originate mortgage loans that meet the
requirements of a derivative and (ii) the Company’s asset/
liability and customer-related derivatives that are Level 3
due to unobservable inputs related to measurement of risk
of nonperformance by the counterparty. In addition, the
Company’s Visa swaps are classified within Level 3.
The significant unobservable inputs used in the fair
value measurement of the Company’s derivative
commitments to purchase and originate mortgage loans
are the percentage of commitments that actually become a
closed loan and the MSR value that is inherent in the
underlying loan value. A significant increase in the rate of
loans that close would have resulted in a larger derivative
asset or liability. A significant increase in the inherent MSR
value would have resulted in an increase in the derivative
asset or a reduction in the derivative liability. Expected loan
close rates and the inherent MSR values are directly
impacted by changes in market rates and will generally
move in the same direction as interest rates.
The following table shows the significant valuation assumption ranges for the Company’s derivative commitments to purchase
and originate mortgage loans at December 31, 2024:
Weighted-
Minimum
Maximum
Average(a)
Expected loan close rate
25 %
100 %
83 %
Inherent MSR value (basis points per loan)
63
196
(a) Determined based on the relative fair value of the related mortgage loans.
The significant unobservable input used in the fair value
measurement of certain of the Company’s asset/liability and
customer-related derivatives is the credit valuation
adjustment related to the risk of counterparty
nonperformance. A significant increase in the credit
valuation adjustment would have resulted in a lower fair
value measurement. A significant decrease in the credit
valuation adjustment would have resulted in a higher fair
value measurement. The credit valuation adjustment is
impacted by changes in market rates, volatility, market
implied credit spreads, and loss recovery rates, as well as
the Company’s assessment of the counterparty’s credit
position. At December 31, 2024, the minimum, maximum
and weighted-average credit valuation adjustment as a
percentage of the net fair value of the counterparty’s
derivative contracts prior to adjustment was 0 percent,
6,313 percent and 2 percent, respectively.
The significant unobservable inputs used in the fair
value measurement of the Visa swaps are management’s
estimate of the probability of certain litigation scenarios
occurring, and the timing of the resolution of the related
litigation loss estimates in excess, or shortfall, of the
Company’s proportional share of escrow funds. An
increase in the loss estimate or a delay in the resolution of
the related litigation would have resulted in an increase in
the derivative liability. A decrease in the loss estimate or an
acceleration of the resolution of the related litigation would
have resulted in a decrease in the derivative liability.
116
121
The following table summarizes the balances of assets and liabilities measured at fair value on a recurring basis:
(Dollars in Millions)
Level 1
Level 2
Level 3
Netting
Total
December 31, 2024
Available-for-sale securities
U.S. Treasury and agencies
$
23,891 $
4,496 $
— $
— $
28,387
Mortgage-backed securities
Residential agency
—
33,281
—
—
33,281
Commercial
Agency
—
7,351
—
—
7,351
Non-agency
—
6
—
—
6
Asset-backed securities
—
7,165
—
—
7,165
Obligations of state and political subdivisions
—
9,552
—
—
9,552
Other
—
250
—
—
250
Total available-for-sale
23,891
62,101
—
—
85,992
Mortgage loans held for sale
—
2,251
—
—
2,251
Mortgage servicing rights
—
—
3,369
—
3,369
Derivative assets
27
5,208
1,202
(2,979)
3,458
Other assets
420
1,769
—
—
2,189
Total
$
24,338 $
71,329 $
4,571 $
(2,979) $
97,259
Time deposits
$
— $
5,754 $
— $
— $
5,754
Long-term debt
—
391
—
—
391
Derivative liabilities
27
5,131
3,002
(2,949)
5,211
Short-term borrowings and other liabilities(a)
475
1,460
—
—
1,935
Total
$
502 $
12,736 $
3,002 $
(2,949) $
13,291
December 31, 2023
Available-for-sale securities
U.S. Treasury and agencies
$
14,787 $
4,755 $
— $
— $
19,542
Mortgage-backed securities
Residential agency
—
26,078
—
—
26,078
Commercial
Agency
—
7,343
—
—
7,343
Non-agency
—
6
—
—
6
Asset-backed securities
—
6,724
—
—
6,724
Obligations of state and political subdivisions
—
9,989
—
—
9,989
Other
—
24
—
—
24
Total available-for-sale
14,787
54,919
—
—
69,706
Mortgage loans held for sale
—
2,011
—
—
2,011
Mortgage servicing rights
—
—
3,377
—
3,377
Derivative assets
—
5,078
1,453
(3,666)
2,865
Other assets
550
1,991
—
—
2,541
Total
$
15,337 $
63,999 $
4,830 $
(3,666) $
80,500
Time Deposits
$
— $
2,818 $
— $
— $
2,818
Derivative liabilities
16
4,955
3,338
(3,720)
4,589
Short-term borrowings and other liabilities(a)
517
1,786
—
—
2,303
Total
$
533 $
9,559 $
3,338 $
(3,720) $
9,710
Note: Excluded from the table above are equity investments without readily determinable fair values. The Company has elected to carry these investments at historical cost, adjusted
for impairment and any changes resulting from observable price changes for identical or similar investments of the issuer. The aggregate carrying amount of these equity investments
was $159 million and $133 million at December 31, 2024 and 2023, respectively, and reflect no impairment or observable price change adjustment at December 31, 2024, compared
with a cumulative impairment of $5 million and no observable price change adjustment at December 31, 2023. The Company recorded a $5 million impairment on these equity
investments during 2023. The Company did not record any adjustments for observable price changes during 2024 and 2023.
(a) Primarily represents the Company’s obligation on securities sold short required to be accounted for at fair value per applicable accounting guidance.
122 U.S. Bancorp 2024 Annual Report
The following table presents the changes in fair value for all assets and liabilities measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) for the years ended December 31:
Net Change in
Net Gains
Unrealized
Net Gains
(Losses)
Gains (Losses)
(Losses)
Included in
Relating to
(Dollars in Millions)
Beginning
of Period
Balance
Included
in Net
Income
Other
Comprehensive
Income (Loss) Purchases
Sales
Principal
Payments Issuances
Settlements
End of
Period
Balance
Assets and
Liabilities Held
at End of Period
2024
Mortgage servicing rights
$ 3,377 $
(97) (a) $
— $
1 $ (188) $
— $
276
(c) $
— $ 3,369 $
(97) (a)
Net derivative assets and
liabilities
(1,885)
(3,829) (b)
—
1,076
(18)
—
1
2,855
(1,800)
(492) (d)
2023
Available-for-sale securities
Obligations of state and
political subdivisions
$
1 $
—
$
— $
— $
— $
(1) $
—
$
— $
— $
—
Total available-for-
sale
1
—
—
—
—
(1)
—
—
—
—
Mortgage servicing rights
3,755
(316) (a)
—
5
(440)
—
373
(c)
—
3,377
(316) (a)
Net derivative assets and
liabilities
(3,199)
(2,696) (e)
—
552
(45)
—
1
3,502
(1,885)
(183) (f)
2022
Available-for-sale securities
Asset-backed securities
$
7 $
—
$
(3) $
— $
(4) $
— $
—
$
— $
— $
—
Obligations of state and
political subdivisions
1
—
—
—
—
—
—
—
1
—
Total available-for-
sale
8
—
(3)
—
(4)
—
—
—
1
—
Mortgage servicing rights
2,953
(a)
311
—
156
(255)
—
590
(c)
—
3,755
(a)
311
Net derivative assets and
liabilities
799
(5,940) (g)
—
716
(36)
—
11
1,251
(3,199)
(3,538) (h)
(a) Included in mortgage banking revenue.
(b) Approximately $200 million, $(3.9) billion and $(147) million included in mortgage banking revenue, commercial products revenue and other non-interest income, respectively.
(c) Represents MSRs capitalized during the period.
(d) Approximately $7 million, $(352) million and $(147) million included in mortgage banking revenue, commercial products revenue and other non-interest income, respectively.
(e) Approximately $182 million, $(2.9) billion and $1 million included in mortgage banking revenue, commercial products revenue and other non-interest income, respectively.
(f) Approximately $15 million, $(199) million and $1 million included in mortgage banking revenue, commercial products revenue and other non-interest income, respectively.
(g) Approximately $(141) million, $(5.6) billion and $(181) million included in mortgage banking revenue, commercial products revenue and other non-interest income, respectively.
(h) Approximately $5 million, $(3.4) billion and $(181) million included in mortgage banking revenue, commercial products revenue and other non-interest income, respectively.
The Company is also required periodically to measure certain other financial assets at fair value on a nonrecurring basis.
These measurements of fair value usually result from the application of lower-of-cost-or-fair value accounting or write-downs of
individual assets.
The following table summarizes the balances as of the measurement date of assets measured at fair value on a nonrecurring
basis, and still held as of December 31:
2024
2023
(Dollars in Millions)
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Loans(a)
$
— $
— $
636 $
636 $
— $
— $
354 $
354
Other assets(b)
—
—
25
25
—
—
27
27
(a) Represents the carrying value of loans for which adjustments were based on the fair value of the collateral, excluding loans fully charged-off.
(b) Primarily represents the fair value of foreclosed properties that were measured at fair value based on an appraisal or broker price opinion of the collateral subsequent to their initial
acquisition.
The following table summarizes losses recognized related to nonrecurring fair value measurements of individual assets or
portfolios for the years ended December 31:
(Dollars in Millions)
2024
2023
2022
Loans(a)
$
399 $
368 $
40
Other assets(b)
12
32
20
(a) Represents write-downs of loans which were based on the fair value of the collateral, excluding loans fully charged-off.
(b) Primarily represents related losses of foreclosed properties that were measured at fair value subsequent to their initial acquisition.
123
Fair Value Option
The following table summarizes the differences between the aggregate fair value carrying amount of the assets and liabilities for
which the fair value option has been elected and the aggregate remaining contractual principal balance outstanding as of
December 31:
2024
2023
Carrying
Amount Over
(Under)
Fair Value
Contractual
Contractual
Carrying
Principal
Principal
(Dollars in Millions)
Amount
Outstanding
Outstanding
Total loans(a)
$
2,251 $
2,243 $
8
Time deposits
5,754
5,762
(8)
Long-term debt
391
409
(18)
Carrying
Amount Over
(Under)
Fair Value
Contractual
Contractual
Carrying
Principal
Principal
Amount
Outstanding
Outstanding
$
2,011 $
1,994 $
17
2,818
2,822
(4)
—
—
—
(a) Includes nonaccrual loans of $1 million carried at fair value with contractual principal outstanding of $1 million at December 31, 2024 and $1 million carried at fair value with
contractual principal outstanding of $1 million at December 31, 2023. Includes loans 90 days or more past due of $4 million carried at fair value with contractual principal
outstanding of $4 million at December 31, 2024 and $4 million carried at fair value with contractual principal outstanding of $4 million at December 31, 2023.
credit card, merchant processing and trust customers,
Fair Value of Financial Instruments
other purchased intangibles, premises and equipment,
The following section summarizes the estimated fair value
deferred taxes and other liabilities. Additionally, in
for financial instruments accounted for at amortized cost as
accordance with the disclosure guidance, receivables and
of December 31, 2024 and 2023. In accordance with
payables due in one year or less, insurance contracts,
disclosure guidance related to fair values of financial
equity investments not accounted for at fair value, and
instruments, the Company did not include assets and
deposits with no defined or contractual maturities are
liabilities that are not financial instruments, such as the
excluded.
value of goodwill, long-term relationships with deposit,
The estimated fair values of the Company’s financial instruments as of December 31, are shown in the table below:
2024
2023
Carrying
Fair Value
Carrying
Fair Value
(Dollars in Millions)
Amount
Level 1
Level 2
Level 3
Total
Amount
Level 1
Level 2
Level 3
Total
Financial Assets
Cash and due from banks
$56,502 $56,502 $
— $
— $56,502 $61,192 $61,192 $
— $
— $61,192
Federal funds sold and securities
purchased under resale agreements
6,380
—
6,380
—
6,380
2,543
—
2,543
—
2,543
Investment securities held-to-maturity
78,634
1,275 65,000
—
66,275
84,045
1,310 72,778
—
74,088
Loans held for sale(a)
322
—
—
322
322
190
—
—
190
190
Loans, net of allowance for losses
372,249
—
— 365,628 365,628 366,456
—
— 362,849 362,849
Other(b)
2,482
—
1,767
715
2,482
2,377
—
1,863
514
2,377
Financial Liabilities
Time deposits(c)
49,015
— 49,156
—
49,156
49,455
— 49,607
—
49,607
Short-term borrowings(d)
13,583
— 13,419
—
13,419
12,976
— 12,729
—
12,729
Long-term debt(e)
57,611
— 56,441
—
56,441
51,480
— 49,697
—
49,697
Other(f)
5,220
—
1,369
3,851
5,220
5,432
—
1,406
4,026
5,432
(a) Excludes mortgages held for sale for which the fair value option under applicable accounting guidance was elected.
(b) Includes investments in Federal Reserve Bank and Federal Home Loan Bank stock and tax-advantaged investments.
(c) Excludes time deposits for which the fair value option under applicable accounting guidance was elected.
(d) Excludes the Company’s obligation on securities sold short required to be accounted for at fair value per applicable accounting guidance.
(e) Excludes structured long-term notes for which the fair value option under applicable accounting guidance was elected.
(f) Includes operating lease liabilities and liabilities related to tax-advantaged investments.
The fair value of unfunded commitments, deferred non-
$376 million and $489 million at December 31, 2024 and
yield related loan fees, standby letters of credit and other
2023, respectively. The carrying value of other guarantees
guarantees is approximately equal to their carrying value.
was $194 million and $198 million at December 31, 2024
The carrying value of unfunded commitments, deferred
and 2023, respectively.
non-yield related loan fees and standby letters of credit was
124 U.S. Bancorp 2024 Annual Report
NOTE 22 Guarantees and Contingent Liabilities
Visa Restructuring and Card Association Litigation The
Company’s Payment Services business issues credit and
debit cards and acquires credit and debit card transactions
through the Visa U.S.A. Inc. card association or its affiliates
(collectively “Visa”). In 2007, Visa completed a restructuring
and issued shares of Visa Inc. common stock to its financial
institution members in contemplation of its initial public
offering (“IPO”) completed in the first quarter of 2008 (the
“Visa Reorganization”). As a part of the Visa
Reorganization, the Company received its proportionate
number of shares of Visa Inc. common stock, which were
subsequently converted to Class B shares of Visa Inc.
(“Class B shares”). As of December 31, 2024, the Company
has sold substantially all of its Class B shares.
Visa U.S.A. Inc. (“Visa U.S.A.”) and MasterCard
International (collectively, the “Card Brands”) are
defendants in antitrust lawsuits challenging the practices of
the Card Brands (the “Visa Litigation”). Visa U.S.A. member
banks have a contingent obligation to indemnify Visa Inc.
under the Visa U.S.A. bylaws (which were modified at the
time of the restructuring in October 2007) for potential
losses arising from the Visa Litigation. The indemnification
by the Visa U.S.A. member banks has no specific maximum
amount. Using proceeds from its IPO and through
reductions to the conversion ratio applicable to the Class B
shares held by Visa U.S.A. member banks, Visa Inc. has
funded an escrow account for the benefit of member
financial institutions to fund their indemnification obligations
associated with the Visa Litigation. The receivable related
to the escrow account is classified in other liabilities and
fully offsets the related Visa Litigation contingent liability.
In October 2012, Visa signed a settlement agreement to
resolve merchant class action claims associated with the
multidistrict interchange litigation pending in the United
States District Court for the Eastern District of New York (the
“Multi-District Litigation”). The U.S. Court of Appeals for the
Second Circuit reversed the approval of that settlement and
remanded the matter to the district court. Thereafter, the
case was split into two putative class actions, one seeking
damages (the “Damages Action”) and a separate class
action seeking injunctive relief only (the “Injunctive Action”).
The Damages Action was settled and is fully resolved. A
number of merchants opted out of the Damages Action
class settlement and filed individual cases in various
federal district courts. Some of those cases have been
settled and others are still being litigated. In March 2024,
Visa signed a settlement agreement to resolve the
Injunctive Action. In June 2024, the court declined to grant
preliminary approval of the proposed settlement, which
provided for lower interchange fees and various other rule
changes for U.S. merchants. Accordingly, the Injunctive
Action continues.
Commitments to Extend Credit Commitments to extend
credit are legally binding and generally have fixed
expiration dates or other termination clauses. The
contractual amount represents the Company’s exposure to
credit loss, in the event of default by the borrower. The
Company manages this credit risk by using the same credit
policies it applies to loans. Collateral is obtained to secure
commitments based on management’s credit assessment
of the borrower. The collateral may include marketable
securities, receivables, inventory, equipment and real
estate. Since the Company expects many of the
commitments to expire without being drawn, total
commitment amounts do not necessarily represent the
Company’s future liquidity requirements. In addition, the
commitments include consumer credit lines that are
cancelable upon notification to the consumer.
The contract or notional amounts of unfunded commitments
to extend credit at December 31, 2024, excluding those
commitments considered derivatives, were as follows:
Term
Greater
Less Than
Than One
(Dollars in Millions)
One Year
Year
Total
Commercial and
commercial real estate
loans
$ 46,760 $138,973 $185,733
Corporate and purchasing
card loans(a)
35,687
—
35,687
Residential mortgages
226
—
226
Retail credit card loans(a)
137,404
—
137,404
Other retail loans
16,460
26,145
42,605
Other
7,736
—
7,736
(a) Primarily cancellable at the Company’s discretion.
Other Guarantees and Contingent
Liabilities
The following table is a summary of other guarantees and
contingent liabilities of the Company at December 31,
2024:
Maximum
Potential
Collateral
Carrying
Future
(Dollars in Millions)
Held
Amount
Payments
Standby letters of credit
$
— $
23 $ 10,522
Third party borrowing
arrangements
—
—
1
Securities lending
indemnifications
6,862
—
6,681
Asset sales
—
112
12,650
Merchant processing
816
61
144,713
Other
—
21
3,245
Letters of Credit Standby letters of credit are commitments
the Company issues to guarantee the performance of a
customer to a third party. The guarantees frequently
support public and private borrowing arrangements,
including commercial paper issuances, bond financings
and other similar transactions. The Company also issues
and confirms commercial letters of credit on behalf of
customers to ensure payment or collection in connection
with trade transactions. In the event of a customer’s or
125
counterparty’s nonperformance, the Company’s credit loss
exposure is similar to that in any extension of credit, up to
the letter’s contractual amount. Management assesses the
borrower’s credit to determine the necessary collateral,
which may include marketable securities, receivables,
inventory, equipment and real estate. Since the conditions
requiring the Company to fund letters of credit may not
occur, the Company expects its liquidity requirements to be
less than the total outstanding commitments. The maximum
potential future payments guaranteed by the Company
under standby letter of credit arrangements at
December 31, 2024, were approximately $10.5 billion with
a weighted-average term of approximately 14 months. The
estimated fair value of standby letters of credit was
approximately $23 million at December 31, 2024.
The contract or notional amount of letters of credit at
December 31, 2024, were as follows:
Term
Greater
Less Than
Than One
(Dollars in Millions)
One Year
Year
Total
Standby
$
7,105 $
3,417 $ 10,522
Commercial
441
21
462
Guarantees Guarantees are contingent commitments
issued by the Company to customers or other third parties.
The Company’s guarantees primarily include parent
guarantees related to subsidiaries’ third party borrowing
arrangements; third party performance guarantees inherent
in the Company’s business operations, such as indemnified
securities lending programs and merchant charge-back
guarantees; and indemnification or buy-back provisions
related to certain asset sales. For certain guarantees, the
Company has recorded a liability related to the potential
obligation, or has access to collateral to support the
guarantee or through the exercise of other recourse
provisions can offset some or all of the maximum potential
future payments made under these guarantees.
Third Party Borrowing Arrangements The Company
provides guarantees to third parties as a part of certain
subsidiaries’ borrowing arrangements. The maximum
potential future payments guaranteed by the Company
under these arrangements were approximately $1 million at
December 31, 2024.
Commitments from Securities Lending The Company
participates in securities lending activities by acting as the
customer’s agent involving the loan of securities. The
Company indemnifies customers for the difference between
the fair value of the securities lent and the fair value of the
collateral received. Cash collateralizes these transactions.
The maximum potential future payments guaranteed by the
Company under these arrangements were approximately
$6.7 billion at December 31, 2024, and represent the fair
value of the securities lent to third parties. At December 31,
2024, the Company held $6.9 billion of cash as collateral
for these arrangements.
Asset Sales The Company has provided guarantees to
certain third parties in connection with the sale or
syndication of certain assets, primarily loan portfolios and
tax-advantaged investments. These guarantees are
generally in the form of asset buy-back or make-whole
provisions that are triggered upon a credit event or a
change in the tax-qualifying status of the related projects,
as applicable, and remain in effect until the loans are
collected or final tax credits are realized, respectively. The
maximum potential future payments guaranteed by the
Company under these arrangements were approximately
$12.7 billion at December 31, 2024, and represented the
proceeds received from the buyer or the guaranteed
portion in these transactions where the buy-back or make-
whole provisions have not yet expired. At December 31,
2024, the Company had reserved $103 million for potential
losses related to the sale or syndication of tax-advantaged
investments.
The maximum potential future payments do not include
loan sales where the Company provides standard
representations and warranties to the buyer against losses
related to loan underwriting documentation defects that
may have existed at the time of sale that generally are
identified after the occurrence of a triggering event such as
delinquency. For these types of loan sales, the maximum
potential future payments is generally the unpaid principal
balance of loans sold measured at the end of the current
reporting period. Actual losses will be significantly less than
the maximum exposure, as only a fraction of loans sold will
have a representation and warranty breach, and any losses
on repurchase would generally be mitigated by any
collateral held against the loans.
The Company regularly sells loans to GSEs as part of its
mortgage banking activities. The Company provides
customary representations and warranties to GSEs in
conjunction with these sales. These representations and
warranties generally require the Company to repurchase
assets if it is subsequently determined that a loan did not
meet specified criteria, such as a documentation deficiency
or rescission of mortgage insurance. If the Company is
unable to cure or refute a repurchase request, the
Company is generally obligated to repurchase the loan or
otherwise reimburse the GSE for losses. At December 31,
2024, the Company had reserved $9 million for potential
losses from representation and warranty obligations,
compared with $13 million at December 31, 2023. The
Company’s reserve reflects management’s best estimate of
losses for representation and warranty obligations. The
Company’s repurchase reserve is modeled at the loan
level, taking into consideration the individual credit quality
and borrower activity that has transpired since origination.
The model applies credit quality and economic risk factors
to derive a probability of default and potential repurchase
that are based on the Company’s historical loss
experience, and estimates loss severity based on expected
collateral value. The Company also considers qualitative
factors that may result in anticipated losses differing from
historical loss trends.
As of December 31, 2024 and 2023, the Company had
$15 million and $18 million, respectively, of unresolved
representation and warranty claims from GSEs. The
126 U.S. Bancorp 2024 Annual Report
Company does not have a significant amount of unresolved
claims from investors other than GSEs.
Merchant Processing The Company, through its
subsidiaries, provides merchant processing services.
Under the rules of credit card associations, a merchant
processor retains a contingent liability for credit card
transactions processed. This contingent liability arises in
the event of a billing dispute between the merchant and a
cardholder that is ultimately resolved in the cardholder’s
favor. In this situation, the transaction is “charged-back” to
the merchant and the disputed amount is credited or
otherwise refunded to the cardholder. If the Company is
unable to collect this amount from the merchant, it bears
the loss for the amount of the refund paid to the cardholder.
A cardholder, through its issuing bank, generally has
until the later of up to four months after the date the
transaction is processed or the receipt of the product or
service to present a charge-back to the Company as the
merchant processor. The absolute maximum potential
liability is estimated to be the total volume of credit card
transactions that meet the associations’ requirements to be
valid charge-back transactions at any given time.
Management estimates that the maximum potential
exposure for charge-backs would approximate the total
amount of merchant transactions processed through the
credit card associations for the last four months. For the last
four months of 2024 this amount totaled approximately
$144.7 billion. In most cases, this contingent liability is
unlikely to arise, as most products and services are
delivered when purchased and amounts are refunded
when items are returned to merchants. However, where the
product or service has been purchased but is not provided
until a future date (“future delivery”), the potential for this
contingent liability increases. To mitigate this risk, the
Company may require the merchant to make an escrow
deposit, place maximum volume limitations on future
delivery transactions processed by the merchant at any
point in time, or require various credit enhancements
(including letters of credit and bank guarantees). Also,
merchant processing contracts may include event triggers
to provide the Company more financial and operational
control in the event of financial deterioration of the
merchant.
The Company currently processes card transactions in
the United States, Canada and Europe through wholly-
owned subsidiaries. In the event a merchant was unable to
fulfill product or services subject to future delivery, such as
airline tickets, the Company could become financially liable
for refunding the purchase price of such products or
services purchased through the credit card associations
under the charge-back provisions. Charge-back risk
related to these merchants is evaluated in a manner similar
to credit risk assessments and, as such, merchant
processing contracts contain various provisions to protect
the Company in the event of default. At December 31,
2024, the value of airline tickets purchased to be delivered
at a future date through card transactions processed by the
Company was $12.0 billion. The Company held collateral of
$689 million in escrow deposits, letters of credit and
indemnities from financial institutions, and liens on various
assets related to these airline processing arrangements. In
addition to specific collateral or other credit enhancements,
the Company maintains a liability for its implied guarantees
associated with future delivery. At December 31, 2024, the
liability was $40 million primarily related to these airline
processing arrangements.
In the normal course of business, the Company has
unresolved charge-backs. The Company assesses the
likelihood of its potential liability based on the extent and
nature of unresolved charge-backs and its historical loss
experience. At December 31, 2024, the Company held
$127 million of merchant escrow deposits as collateral and
had a recorded liability for potential losses of $21 million
related to these charge-backs.
Tender Option Bond Program Guarantee As discussed in
Note 7, the Company previously sponsored a municipal
bond securities tender option bond program and
consolidated the program’s entities on its Consolidated
Balance Sheet. The Company provided financial
performance guarantees related to the program’s entities.
During 2024, the Company ended this arrangement,
effectively eliminating any outstanding related guarantees.
Other Guarantees and Commitments As of December 31,
2024, the Company sponsored, and owned 100 percent of
the common equity of, USB Capital IX, a wholly-owned
unconsolidated trust, formed for the purpose of issuing
redeemable Income Trust Securities (“ITS”) to third-party
investors, originally investing the proceeds in junior
subordinated debt securities (“Debentures”) issued by the
Company and entering into stock purchase contracts to
purchase the Company’s preferred stock in the future. As of
December 31, 2024, all of the Debentures issued by the
Company have either matured or been retired. Total assets
of USB Capital IX were $685 million at December 31, 2024,
consisting primarily of the Company’s Series A Preferred
Stock. The Company’s obligations under the transaction
documents, taken together, have the effect of providing a
full and unconditional guarantee by the Company, on a
junior subordinated basis, of the payment obligations of the
trust to third-party investors totaling $684 million at
December 31, 2024.
The Company has also made other financial
performance guarantees and commitments primarily
related to the operations of its subsidiaries. At
December 31, 2024, the maximum potential future
payments guaranteed or committed by the Company under
these arrangements were approximately $2.6 billion.
Litigation and Regulatory Matters
The Company is subject to various litigation and regulatory
matters that arise from the conduct of its business activities.
The Company establishes reserves for such matters when
potential losses become probable and can be reasonably
estimated. The Company believes the ultimate resolution of
existing legal and regulatory matters will not have a material
adverse effect on the financial condition, results of
operations or cash flows of the Company. However, in light
of the uncertainties inherent in these matters, it is possible
that the ultimate resolution of one or more of these matters
127
may have a material adverse effect on the Company’s
results of operations for a particular period, and future
changes in circumstances or additional information could
result in additional accruals or resolution in excess of
established accruals, which could adversely affect the
Company’s results of operations, potentially materially.
Residential Mortgage-Backed Securities Litigation
Starting in 2011, the Company and other large financial
institutions have been sued in their capacity as trustee for
residential mortgage–backed securities trusts for losses
arising out of the 2008 financial crisis. In the lawsuits
brought against the Company, the investors allege that the
Company’s banking subsidiary, USBNA, as trustee caused
them to incur substantial losses by failing to enforce loan
repurchase obligations and failing to abide by appropriate
standards of care after events of default allegedly
occurred. The plaintiffs in these matters seek monetary
damages in unspecified amounts and most also seek
equitable relief.
Regulatory Matters The Company is continually subject to
examinations, inquiries, investigations and other forms of
regulatory and governmental inquiry or scrutiny covering a
wide range of issues in its financial services businesses
including in areas of heightened regulatory scrutiny, such
as compliance, risk management, third-party risk
management and consumer protection. In some cases,
these matters are part of reviews of specified activities at
multiple industry participants; in others, they are directed at
the Company individually. For example, the Division of
Enforcement of the SEC has investigated U.S. Bancorp
Fund Services, LLC (“USBFS”), a subsidiary of USBNA,
relating to its role providing fund administration services to
a third-party investment fund. This investment fund was
NOTE 23 Business Segments
The Company's management reporting is organized into
three reportable operating segments aligned by major lines
of business based on the products and services provided
to customers through its distribution channels. All other
business activities not included in the reportable operating
segments are included in the Treasury and Corporate
Support business segment. The chief operating decision
maker uses net interest income on a taxable-equivalent
basis, noninterest income and net income (loss) before
income taxes for all reportable segments in deciding how to
allocate resources during the annual budget and monthly
forecasting process. The chief operating decision maker
considers variances in reported results to forecasts and
variances to prior periods to assess performance. The
Company’s chief operating decision maker is the Chief
Executive Officer. The Company has the following
reportable operating and other business segments:
Wealth, Corporate, Commercial and Institutional
Banking Wealth, Corporate, Commercial and Institutional
Banking provides core banking, specialized lending,
transaction and payment processing, capital markets, asset
management, and brokerage and investment related
advised by an investment adviser who engaged in fraud,
and USBFS was not affiliated with the investment adviser
and did not provide any advisory services to the fund. The
Division of Enforcement made a preliminary determination
to recommend that the SEC file an enforcement action
against USBFS, and USBFS has engaged in discussions
with the SEC on this matter. The Company is cooperating
fully with all pending examinations, inquiries and
investigations, any of which could lead to administrative or
legal proceedings or settlements. Remedies in these
proceedings or settlements may include fines, penalties,
restitution or alterations in the Company’s business
practices (which may increase the Company’s operating
expenses and decrease its revenue).
Outlook Due to their complex nature, it can be years
before litigation and regulatory matters are resolved. The
Company may be unable to develop an estimate or range
of loss where matters are in early stages, there are
significant factual or legal issues to be resolved, damages
are unspecified or uncertain, or there is uncertainty as to a
litigation class being certified or the outcome of pending
motions, appeals or proceedings. For those litigation and
regulatory matters where the Company has information to
develop an estimate or range of loss, the Company
believes the upper end of the range of reasonably possible
losses in aggregate, in excess of any reserves established
for matters where a loss is considered probable, will not be
material to its financial condition, results of operations or
cash flows. The Company’s estimates are subject to
significant judgment and uncertainties, and the matters
underlying the estimates will change from time to time.
Actual results may vary significantly from the current
estimates.
services to wealth, middle market, large corporate,
commercial real estate, government and institutional
clients.
Consumer and Business Banking Consumer and
Business Banking comprises consumer banking, small
business banking and consumer lending. Products and
services are delivered through banking offices, telephone
servicing and sales, online services, direct mail, ATMs,
mobile devices, distributed mortgage loan officers, and
intermediary relationships including auto dealerships,
mortgage banks, and strategic business partners.
Payment Services Payment Services includes consumer
and business credit cards, stored-value cards, debit cards,
corporate, government and purchasing card services and
merchant processing.
Treasury and Corporate Support Treasury and Corporate
Support includes the Company’s investment portfolios,
funding, capital management, interest rate risk
management, income taxes not allocated to business
segments, including most investments in tax-advantaged
projects, and the residual aggregate of those expenses
128 U.S. Bancorp 2024 Annual Report
associated with corporate activities that are managed on a
consolidated basis.
Basis of Presentation Business segment results are
derived from the Company’s business unit profitability
reporting systems by specifically attributing managed
balance sheet assets, deposits and other liabilities and
their related income or expense. The allowance for credit
losses and related provision expense are allocated to the
business segments according to the volume and credit
quality of the loan balances managed, but with the impact
of changes in economic forecasts recorded in Treasury and
Corporate Support. Goodwill and other intangible assets
are assigned to the business segments based on the mix of
business of an entity acquired by the Company. Within the
Company, capital levels are evaluated and managed
centrally; however, capital is allocated to the business
segments to support evaluation of business performance.
Business segments are allocated capital on a risk-adjusted
basis considering economic and regulatory capital
requirements. Generally, the determination of the amount of
capital allocated to each business segment includes credit
allocations following a Basel III regulatory framework.
Interest income and expense is determined based on the
assets and liabilities managed by the business segment.
Because funding and asset/liability management is a
central function, funds transfer-pricing methodologies are
utilized to allocate a cost of funds used or credit for funds
provided to all business segment assets and liabilities,
respectively, using a matched funding concept. Also, each
business unit is allocated the taxable-equivalent benefit of
tax-exempt products. The residual effect on net interest
income of asset/liability management activities is included
in Treasury and Corporate Support. Noninterest income
and expenses directly managed by each business
segment, including fees, service charges, salaries and
benefits, and other direct revenues and costs are
accounted for within each segment’s financial results in a
manner similar to the consolidated financial statements.
Occupancy costs are allocated based on utilization of
facilities by the business segments. Generally, operating
losses are charged to the business segment when the loss
event is realized in a manner similar to a loan charge-off.
Noninterest expenses incurred by centrally managed
operations or business segments that directly support
another business segment’s operations are charged to the
applicable business segment based on its utilization of
those services, primarily measured by the volume of
customer activities, number of employees or other relevant
factors. These allocated expenses are reported as net
shared services expense within noninterest expense.
Certain activities that do not directly support the operations
of the business segments or for which the business
segments are not considered financially accountable in
evaluating their performance are not charged to the
business segments. The income or expenses associated
with these corporate activities, including merger and
integration charges, are reported within the Treasury and
Corporate Support business segment. Income taxes are
assessed to each business segment at a standard tax rate
with the residual tax expense or benefit to arrive at the
consolidated effective tax rate included in Treasury and
Corporate Support.
Designations, assignments and allocations change from
time to time as management systems are enhanced,
methods of evaluating performance or product lines
change or business segments are realigned to better
respond to the Company’s diverse customer base. During
2024 and 2023, certain organization and methodology
changes were made, including revising the Company’s
business segment funds transfer-pricing methodology
related to deposits and loans during the second quarter of
2024 and combining its Wealth Management and
Investment Services and Corporate and Commercial
Banking business segments to create the Wealth,
Corporate, Commercial and Institutional Banking business
segment during the third quarter of 2023. Prior period
results were recast and presented on a comparable basis.
129
Condensed income statement results by business segment for the years ended December 31 were as follows:
Wealth, Corporate, Commercial and
Institutional Banking
Consumer and Business Banking
Payment Services
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
2024
2023
2022
Net interest income (taxable-equivalent
basis)(a)
$ 7,645 $ 7,862 $ 5,680 $ 7,658 $ 8,683 $ 7,266 $ 2,831 $ 2,609 $ 2,504
Noninterest income(b)(c)
4,548
4,141
3,561
1,606
1,675
1,536
4,198
4,055
3,794
Total net revenue
12,193
12,003
9,241
9,264
10,358
8,802
7,029
6,664
6,298
Compensation and employee benefits
2,191
2,151
1,803
2,221
2,305
2,041
906
869
835
Other intangibles
206
230
37
266
292
42
97
114
136
Net shared services
2,116
2,132
1,547
2,800
2,956
2,655
2,126
2,017
1,656
Other direct expenses(d)
936
931
748
1,282
1,316
1,041
926
920
898
Total noninterest expense
5,449
5,444
4,135
6,569
6,869
5,779
4,055
3,920
3,525
Income (loss) before provision and
income taxes
6,744
6,559
5,106
2,695
3,489
3,023
2,974
2,744
2,773
Provision for credit losses
385
340
154
182
78
75
1,614
1,394
980
Income (loss) before income taxes
6,359
6,219
4,952
2,513
3,411
2,948
1,360
1,350
1,793
Income taxes and taxable-equivalent
adjustment
1,590
1,555
1,239
629
854
738
340
337
448
Net income (loss)
4,769
4,664
3,713
1,884
2,557
2,210
1,020
1,013
1,345
Net (income) loss attributable to
noncontrolling interests
—
—
—
—
—
—
—
—
—
Net income (loss) attributable to U.S.
Bancorp
$ 4,769 $ 4,664 $ 3,713 $ 1,884 $ 2,557 $ 2,210 $ 1,020 $ 1,013 $ 1,345
Treasury and Corporate Support
Consolidated Company
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
Net interest income (taxable-equivalent
basis)(a)
$ (1,725) $ (1,627) $
(604) $ 16,409 $ 17,527 $ 14,846
Noninterest income(b)(c)
694
746
565
11,046
10,617
9,456
Total net revenue
(1,031)
(881)
(39)
27,455
28,144
24,302
Compensation and employee benefits
5,236
5,091
4,478
10,554
10,416
9,157
Other intangibles
—
—
—
569
636
215
Net shared services
(7,042)
(7,105)
(5,858)
—
—
—
Other direct expenses(d)
2,921
4,654
2,847
6,065
7,821
5,534
Total noninterest expense
1,115
2,640
1,467
17,188
18,873
14,906
Income (loss) before provision and
income taxes
(2,146)
(3,521)
(1,506)
10,267
9,271
9,396
Provision for credit losses
57
463
768
2,238
2,275
1,977
Income (loss) before income taxes
(2,203)
(3,984)
(2,274)
8,029
6,996
7,419
Income taxes and taxable-equivalent
adjustment
(859)
(1,208)
(844)
1,700
1,538
1,581
Net income (loss)
(1,344)
(2,776)
(1,430)
6,329
5,458
5,838
Net (income) loss attributable to
noncontrolling interests
(30)
(29)
(13)
(30)
(29)
(13)
Net income (loss) attributable to U.S.
Bancorp
$ (1,374) $ (2,805) $ (1,443) $ 6,299 $ 5,429 $ 5,825
(a) Total net interest income includes a taxable-equivalent adjustment of $120 million, $131 million and $118 million for 2024, 2023 and 2022, respectively. See Non-GAAP Financial
Measures beginning on page 57.
(b) Payment services noninterest income presented net of related rewards and rebate costs and certain partner payments of $3.1 billion, $3.0 billion and $2.9 billion for 2024, 2023 and
2022, respectively.
(c) Total noninterest income includes revenue generated from certain contracts with customers of $9.2 billion, $8.8 billion and $8.0 billion for 2024, 2023 and 2022, respectively.
(d) Other direct expenses for each reportable segment includes: net occupancy and equipment, professional services, marketing and business development, technology and
communications, and other.
130 U.S. Bancorp 2024 Annual Report
Average balances by business segment for the years ended December 31 were as follows:
Wealth, Corporate, Commercial and
Institutional Banking
Consumer and Business Banking
Payment Services
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
2024
2023
2022
Loans
$172,466 $175,836 $150,512 $155,088 $162,012 $144,441 $ 41,081 $ 38,471 $ 34,627
Other earning assets
10,122
6,613
4,771
2,410
2,388
3,117
142
97
634
Goodwill
4,825
4,682
3,634
4,326
4,466
3,250
3,357
3,327
3,305
Other intangible assets
981
1,007
365
4,539
5,264
3,784
277
352
423
Assets
201,362
202,701
169,554
168,913
179,247
160,174
47,169
44,291
41,072
Noninterest-bearing deposits
56,760
70,908
82,671
20,810
30,967
31,719
2,685
2,981
3,410
Interest-bearing deposits
214,622
203,038
175,345
200,611
185,712
163,190
96
103
162
Total deposits
271,382
273,946
258,016
221,421
216,679
194,909
2,781
3,084
3,572
Total U.S. Bancorp shareholders’
equity
21,438
22,366
18,159
14,426
16,026
12,678
10,005
9,310
8,233
Treasury and Corporate Support
Consolidated Company
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
Loans
$
5,240 $
4,956 $
3,993 $373,875 $381,275 $333,573
Other earning assets
220,092
214,826
203,248
232,766
223,924
211,770
Goodwill
—
—
—
12,508
12,475
10,189
Other intangible assets
9
16
5
5,806
6,639
4,577
Assets
246,570
237,201
221,349
664,014
663,440
592,149
Noninterest-bearing deposits
2,752
2,912
2,594
83,007
107,768
120,394
Interest-bearing deposits
11,179
9,042
3,293
426,508
397,895
341,990
Total deposits
13,931
11,954
5,887
509,515
505,663
462,384
Total U.S. Bancorp shareholders’
equity
11,337
5,958
11,346
57,206
53,660
50,416
131
NOTE 24 U.S. Bancorp (Parent Company)
Condensed Balance Sheet
At December 31 (Dollars in Millions)
2024
2023
Assets
Due from banks, principally interest-bearing
$
9,377 $ 11,585
Available-for-sale investment securities
649
662
Investments in bank subsidiaries
63,680
61,495
Investments in nonbank subsidiaries
4,031
3,884
Advances to bank subsidiaries
16,100
12,100
Advances to nonbank subsidiaries
401
159
Other assets
945
974
Total assets
$ 95,183 $ 90,859
Liabilities and Shareholders’ Equity
Long-term debt
$ 35,257 $ 34,332
Other liabilities
1,348
1,221
Shareholders’ equity
58,578
55,306
Total liabilities and shareholders’ equity
$ 95,183 $ 90,859
Condensed Income Statement
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Income
Dividends from bank subsidiaries
$
4,800 $
4,869 $
4,750
Dividends from nonbank subsidiaries
11
11
105
Interest from subsidiaries
1,224
606
119
Other income
24
51
31
Total income
6,059
5,537
5,005
Expense
Interest expense
1,663
1,336
505
Other expense
178
137
162
Total expense
1,841
1,473
667
Income before income taxes and equity in undistributed income of subsidiaries
4,218
4,064
4,338
Applicable income taxes
(95)
(170)
(138)
Income of parent company
4,313
4,234
4,476
Equity in undistributed income of subsidiaries
1,986
1,195
1,349
Net income attributable to U.S. Bancorp
$
6,299 $
5,429 $
5,825
132 U.S. Bancorp 2024 Annual Report
Condensed Statement of Cash Flows
Year Ended December 31 (Dollars in Millions)
2024
2023
2022
Operating Activities
Net income attributable to U.S. Bancorp
$
6,299 $
5,429 $
5,825
Adjustments to reconcile net income to net cash provided by operating activities
Equity in undistributed income of subsidiaries
(1,986)
(1,195)
(1,349)
Other, net
385
83
(398)
Net cash provided by operating activities
4,698
4,317
4,078
Investing Activities
Proceeds from sales and maturities of investment securities
11
25
423
Investments in subsidiaries
—
—
(5,030)
Net (increase) decrease in short-term advances to subsidiaries
(242)
(9)
557
Long-term advances to subsidiaries
(5,500)
(7,500)
(2,000)
Principal collected on long-term advances to subsidiaries
1,500
4,500
2,500
Cash paid for acquisition
—
—
(5,500)
Other, net
16
172
(173)
Net cash used in investing activities
(4,215)
(2,812)
(9,223)
Financing Activities
Proceeds from issuance of long-term debt
6,516
8,150
8,150
Principal payments or redemption of long-term debt
(5,618)
(936)
(2,300)
Proceeds from issuance of preferred stock
—
—
437
Proceeds from issuance of common stock
32
951
21
Repurchase of preferred stock
—
—
(1,100)
Repurchase of common stock
(173)
(62)
(69)
Cash dividends paid on preferred stock
(356)
(341)
(299)
Cash dividends paid on common stock
(3,092)
(2,970)
(2,776)
Net cash provided by (used in) financing activities
(2,691)
4,792
2,064
Change in cash and due from banks
(2,208)
6,297
(3,081)
Cash and due from banks at beginning of year
11,585
5,288
8,369
Cash and due from banks at end of year
$
9,377 $ 11,585 $
5,288
Transfer of funds (dividends, loans or advances) from
bank subsidiaries to the Company is restricted. Federal law
requires loans to the Company or its affiliates to be secured
and generally limits loans to the Company or an individual
affiliate to 10 percent of each bank’s unimpaired capital
and surplus. In the aggregate, loans to the Company and
all affiliates cannot exceed 20 percent of each bank’s
unimpaired capital and surplus.
NOTE 25 Subsequent Events
Dividend payments to the Company by its subsidiary
bank are subject to regulatory review and statutory
limitations and, in some instances, regulatory approval. In
general, dividends by the Company’s bank subsidiary to
the parent company are limited by rules which compare
dividends to net income for regulatorily-defined periods.
Furthermore, dividends are restricted by minimum capital
constraints for all national banks.
The Company has evaluated the impact of events that have occurred subsequent to December 31, 2024 through the date the
consolidated financial statements were filed with the SEC. Based on this evaluation, the Company has determined none of these
events were required to be recognized or disclosed in the consolidated financial statements and related notes.
133
U.S. Bancorp
Consolidated Daily Average Balance Sheet and Related Yields and Rates(a) (Unaudited)
2024
2023
2022
Average
Yields
and
Average
Yields
and
Balances
Interest
Rates
Balances
Interest
Rates
$ 162,757 $
4,566
2.81 % $ 169,442 $
3,457
2.04 %
2,461
147
5.98
3,829
201
5.26
134,883
8,662
6.42
123,797
4,340
3.51
54,646
3,384
6.19
41,098
1,655
4.03
115,922
4,305
3.71
84,749
2,775
3.27
26,570
3,429
12.91
23,478
2,583
11.00
49,254
2,599
5.28
60,451
2,292
3.79
381,275
22,379
5.87
333,573
13,645
4.09
49,000
2,581
5.27
31,425
559
1.78
9,706
471
4.85
7,074
204
2.89
605,199
30,144
4.98
545,343
18,066
3.31
(7,138)
(5,880)
(7,985)
(6,914)
73,364
59,600
$ 663,440
$ 592,149
$ 107,768
$ 120,394
129,341
1,334
1.03
117,471
277
.24
166,272
5,654
3.40
126,221
1,220
.97
55,590
90
.16
67,722
10
.02
46,692
1,697
3.63
30,576
365
1.19
397,895
8,775
2.21
341,990
1,872
.55
435
21
4.72
687
8
1.12
3,103
125
4.04
2,037
20
1.00
7,800
268
3.44
7,186
69
.96
22,803
1,563
6.85
15,830
471
2.98
Year Ended December 31
Average
Yields
and
(Dollars in Millions)
Balances
Interest
Rates
Assets
Investment securities(b)
$ 166,634 $
5,189
3.11 %
Loans held for sale
2,539
173
6.82
Loans(c)
Commercial
133,412
8,717
6.53
Commercial real estate
51,657
3,326
6.44
Residential mortgages
117,026
4,577
3.91
Credit card
28,683
3,815
13.30
Other retail
43,097
2,619
6.08
Total loans
373,875
23,054
6.17
Interest-bearing deposits with banks
51,215
2,744
5.36
Other earning assets
12,378
629
5.08
Total earning assets
606,641
31,789
5.24
Allowance for loan losses
(7,541)
Unrealized gain (loss) on investment securities
(6,820)
Other assets
71,734
Total assets
$ 664,014
Liabilities and Shareholders’ Equity
Noninterest-bearing deposits
$
83,007
Interest-bearing deposits
Interest checking
125,365
1,505
1.20
Money market savings
204,509
7,580
3.71
Savings accounts
39,625
165
.42
Time deposits
57,009
2,438
4.28
Total interest-bearing deposits
426,508
11,688
2.74
Short-term borrowings
Federal funds purchased
330
16
4.88
Securities sold under agreements to repurchase
6,658
326
4.89
Commercial paper
6,718
258
3.85
Other short-term borrowings(d)
3,495
509
14.56
Total short-term borrowings
17,201
1,109
6.45
Long-term debt
54,473
2,583
4.74
Total interest-bearing liabilities
498,182
15,380
3.09
Other liabilities
25,157
Shareholders’ equity
Preferred equity
6,808
Common equity
50,398
Total U.S. Bancorp shareholders’ equity
57,206
Noncontrolling interests
462
Total equity
57,668
Total liabilities and equity
$ 664,014
Net interest income
$ 16,409
Gross interest margin
2.15%
Gross interest margin without taxable-equivalent
increments
2.13%
Percent of Earning Assets
Interest income
5.24%
Interest expense
2.54
Net interest margin
2.70%
Net interest margin without taxable-equivalent increments
2.68%
34,141
1,977
44,142
1,865
476,178
12,617
25,369
6,808
46,852
53,660
465
54,125
$ 663,440
$ 17,527
5.79
4.22
2.65
2.33%
2.31%
4.98%
2.08
2.90%
2.88%
25,740
568
2.21
33,114
780
2.35
400,844
3,220
.80
20,029
6,761
43,655
50,416
466
50,882
$ 592,149
$ 14,846
2.51%
2.49%
3.31%
.59
2.72%
2.70%
(a) Interest and rates are presented on a fully taxable-equivalent basis based on a federal income tax rate of 21 percent.
(b) Yields on investment securities are computed based on amortized cost balances, excluding any premiums or discounts recorded related to the transfer of investment securities at
fair value from available-for-sale to held-to-maturity. Yields include impacts of hedge accounting, including portfolio level basis adjustments.
(c) Interest income and rates on loans include loan fees. Nonaccrual loans are included in average loan balances.
(d) Interest expense and rates includes interest paid on collateral associated with derivative positions.
134 U.S. Bancorp 2024 Annual Report
U.S. Bancorp
Supplemental Financial Data (Unaudited)
Earnings Per Common Share Summary
2024
2023
2022
Earnings per common share
Diluted earnings per common share
Dividends declared per common share
Other Statistics (Dollars and Shares in Millions)
$
3.79
3.79
1.98
$
3.27
3.27
1.93
$
3.69
3.69
1.88
Common shares outstanding(a)
Average common shares outstanding and common stock equivalents
Earnings per common share
Diluted earnings per common share
Number of shareholders(b)
Common dividends declared
2
$
1,560
1,560
1,561
7,517
3,110
2
$
1,558
1,543
1,543
9,094
3,000
3
$
1,531
1,489
1,490
0,280
2,829
(a) Defined as total common shares issued less common stock held in treasury at December 31.
(b) Based on number of common stock shareholders of record at December 31.
The common stock of U.S. Bancorp is traded on the New York Stock Exchange, under the ticker symbol “USB.” At January 31,
2025, there were 27,433 holders of record of the Company’s common stock.
Stock Performance Chart
The following chart compares the cumulative total shareholder return on the Company’s common stock during the five years
ended December 31, 2024, with the cumulative total return on the Standard & Poor’s 500 Index and the KBW Bank Index. The
comparison assumes $100 was invested on December 31, 2019, in the Company’s common stock and in each of the foregoing
indices and assumes the reinvestment of all dividends. The comparisons in the graph are based upon historical data and are not
indicative of, nor intended to forecast, future performance of the Company’s common stock.
135
Company Information
General Business Description U.S. Bancorp is a financial
services holding company headquartered in Minneapolis,
Minnesota, serving millions of local, national and global
customers. U.S. Bancorp is registered as a bank holding
company under the Bank Holding Company Act of 1956
(the “BHC Act”), and has elected to be treated as a
financial holding company under the BHC Act. The
Company provides a full range of financial services,
including lending and depository services, cash
management, capital markets, and trust and investment
management services. It also engages in credit card
services, merchant and ATM processing, mortgage
banking, insurance, brokerage and leasing.
U.S. Bancorp’s banking subsidiary, USBNA, is engaged
in the general banking business, principally in domestic
markets, and holds all of the Company’s consolidated
deposits of $518.3 billion at December 31, 2024. USBNA
provides a wide range of products and services to
individuals, businesses, institutional organizations,
governmental entities and other financial institutions.
Commercial and consumer lending services are principally
offered to customers within the Company’s domestic
markets, to domestic customers with foreign operations and
to large national customers operating in specific industries
targeted by the Company, such as healthcare, utilities, oil
and gas, and state and municipal government. Lending
services include traditional credit products as well as credit
card services, lease financing and import/export trade,
asset-backed lending, agricultural finance and other
products. Depository services include checking accounts,
savings accounts and time certificate contracts. Ancillary
services such as capital markets, treasury management
and receivable lock-box collection are provided to
corporate and governmental entity customers. U.S.
Bancorp’s bank and trust subsidiaries provide a full range
of asset management and fiduciary services for individuals,
estates, foundations, business corporations and charitable
organizations.
Other U.S. Bancorp non-banking subsidiaries offer
investment and insurance products to the Company’s
customers principally within its domestic markets, and fund
administration services to a broad range of mutual and
other funds.
Banking and investment services are provided through a
network of branches and banking offices across the United
States, primarily in the Midwest and West regions, including
2,165 branches across 26 states as of December 31, 2024.
A significant percentage of consumer transactions are
completed using USBNA's digital banking services, both
online and through its digital app. The Company operates a
network of 4,489 ATMs as of December 31, 2024, and
provides 24-hour, seven day a week telephone customer
service. Mortgage banking services are provided through
banking offices and loan production offices throughout the
Company’s domestic markets. Lending products may be
originated through banking offices, indirect
correspondents, brokers or other lending sources. The
Company is also one of the largest providers of corporate
and purchasing card services and corporate trust services
in the United States. The Company’s subsidiaries provide
domestic merchant processing services directly to
merchants, as well as similar merchant services in Canada
and segments of Europe. The Company also provides
corporate trust and fund administration services in Europe.
These foreign operations are not significant to the
Company.
As of December 31, 2024, U.S. Bancorp employed more
than 70,000 people.
Risk Factors
An investment in the Company involves risk, including the
possibility that the value of the investment could fall
substantially and that dividends or other distributions on the
investment could be reduced or eliminated. Below are
material risk factors that make an investment in the
Company speculative or risky.
Economic and Market Conditions Risk
Deterioration in business and economic conditions
could adversely affect the Company’s lending business
and the value of loans and debt securities it holds The
Company’s business activities and earnings are affected by
general business conditions in the United States and
abroad, including factors such as the level and volatility of
short-term and long-term interest rates, inflation, home
prices, unemployment and under-employment levels,
bankruptcies, household income, consumer spending,
fluctuations in both debt and equity capital markets,
liquidity of the global financial markets, the availability and
cost of capital and credit, investor sentiment and
confidence in the financial markets, the strength of the
domestic and global economies in which the Company
operates, and customer deposit behavior. These conditions
can change suddenly and negatively. For example,
volatility due to failures of other banks or general
uncertainty regarding the health of banks may affect
customer deposit behavior and cause deposit withdrawals,
even in situations where USBNA is not itself experiencing
the same uncertainty. Other future changes in these
conditions, whether related to a pandemic, geopolitical
conflict, the threat or occurrence of a U.S. sovereign default
or government shutdown, bank failures, other disruptions in
the financial services industry or otherwise, could have
adverse effects on the Company and its businesses.
Given the high percentage of the Company’s assets
represented directly or indirectly by loans, and the
importance of lending to its overall business, weak
economic conditions have in the past negatively affected,
and may in the future negatively affect, the Company’s
business and results of operations, including new loan
origination activity, existing loan utilization rates and
delinquencies, defaults and the ability of customers to meet
obligations under the loans. The value to the Company of
other assets such as investment securities, most of which
are debt securities or other financial instruments supported
by loans, similarly have been, and would be, negatively
impacted by widespread deterioration in credit quality
resulting from a weakening of the economy.
136 U.S. Bancorp 2024 Annual Report
In addition, volatility and uncertainty related to inflation
or a possible recession and their effects may contribute to
or enhance some of the risks described herein. For
example, higher inflation, slower growth or a recession has
in the past reduced demand for borrowing from both
corporate and consumer customers and could in the future
reduce demand for the Company’s products, adversely
affect the creditworthiness of its borrowers or result in lower
values for its interest-earning assets and investment
securities. Any of these effects, or others that the Company
is not able to predict, could adversely affect its financial
condition or results of operations.
Any deterioration in global economic conditions could
damage the domestic economy or negatively affect the
Company’s borrowers or other counterparties that have
direct or indirect exposure to these regions. Such global
disruptions, including disruptions in supply chains or
geopolitical risk, can undermine investor confidence, cause
a contraction of available credit, or create market volatility,
any of which could have material adverse effects on the
Company’s businesses, results of operations, financial
condition and liquidity, even if the Company’s direct
exposure to the affected region is limited. Global political
trends toward nationalism and isolationism could increase
the probability of a deterioration in global economic
conditions.
Changes in domestic economic, labor, trade or tax
policies may arise from recent transitions in political
leadership in the United States. Such policy changes could
disrupt economic conditions, cause uncertainty, negatively
affect some sectors of the domestic market more than
others, erode consumer confidence levels, cause adverse
changes in payment patterns, lead to increases in
delinquencies and default rates in certain industries or
regions, or have other negative market or customer
impacts. Any of these developments could increase the
Company’s loan charge-offs and provision for credit losses.
Any future economic deterioration that affects household or
corporate incomes, or that causes or amplifies concerns
regarding the possibility of a return to recessionary
conditions, could also result in reduced demand for credit
or fee-based products and services.
Changes in interest rates have in the past reduced, and
could in the future reduce, the Company’s net interest
income The Company’s earnings are dependent to a large
degree on net interest income, which is the difference
between interest income from loans and investments and
interest expense on deposits and borrowings. Net interest
income is significantly affected by market rates of interest,
which in turn are affected by prevailing economic
conditions, by the fiscal and monetary policies of the
federal government and by the policies of various
regulatory agencies. Volatility in interest rates can also
result in the flow of funds away from financial institutions
into direct investments. Direct investments, such as United
States government and corporate securities and other
investment vehicles (including mutual funds), generally pay
higher rates of return than financial institutions. In order to
prevent outflows and compete for a shrinking pool of
deposits, banks, including USBNA, have historically and
may in the future increase deposit rates, which could
decrease net interest income. All of these factors may
cause USBNA to lose some of its low-cost deposit funding.
Customers may also continue to move noninterest-bearing
deposits into interest-bearing accounts, thus increasing
overall deposit costs. Higher funding costs reduce the
Company’s net interest margin and net interest income. A
prolonged period of high or increasing interest rates may
cause the Company to experience an acceleration of
deposit migration, which could adversely affect the
Company’s operations and liquidity. This risk is
exacerbated by technological developments and trends in
customer behavior, including the ease and speed with
which deposits may be transferred electronically,
particularly by a growing number of customers who
maintain accounts with multiple banks.
The Federal Reserve Board raised benchmark interest
rates throughout 2022 and 2023 in response to economic
conditions, particularly inflationary pressures, and in 2024
began to lower interest rates. Meanwhile, longer-term
interest rates, while volatile, have remained elevated.
Historically, when interest rates are increasing, or when
long-term rates are elevated relative to short-term rates, the
Company has earned higher net interest income, and
conversely, decreasing interest rates, or situations when
long-term rates are compressed relative to, or lower than,
short-term rates, have adversely impacted the Company's
net interest income. However, higher interest rates can also
lead to fewer originations of loans, less liquidity in the
financial markets, and higher funding costs, each of which
could adversely affect the Company’s revenues and its
liquidity and capital levels. Higher interest rates could also
negatively affect the payment performance on loans that
are scheduled to mature or are linked to variable interest
rates. If borrowers of variable rate loans are unable to
afford higher interest payments, those borrowers may
reduce or stop making payments, thereby causing the
Company to incur losses and increased operational costs
related to servicing a higher volume of delinquent loans. In
2022 and 2023, as a result of the high interest rate
environment, the Company earned higher net interest
income but experienced fewer originations of mortgage
loans and higher funding costs. During the first half of 2024,
interest rates remained elevated, which drove funding costs
higher, but over the second half of the year, net interest
income began to expand as funding costs stabilized and
began to decrease.
The Company’s results may be materially affected by
market fluctuations and significant changes in the value
of financial instruments The value of securities,
derivatives and other financial instruments which the
Company owns or in which it makes markets can be
materially affected by market fluctuations. Market volatility,
illiquid market conditions and other disruptions in the
financial markets may make it extremely difficult to value
certain financial instruments. Subsequent valuations of
financial instruments in future periods, in light of factors
then prevailing, may result in significant changes in the
value of these instruments. In addition, at the time of any
disposition of these financial instruments, the price that the
137
Company ultimately realizes will depend on the demand
and liquidity in the market at that time and may be
materially lower than their current fair value. Any of these
factors could cause a decline in the value of financial
instruments that the Company owns or in which it makes
markets, which may have an adverse effect on the
Company’s results of operations. In addition, losses in the
value of the Company’s investment securities or loan
portfolio could affect market perception of the Company
and create volatility in the Company’s stock price. Losses in
the value of the Company’s investment securities, even if
they do not affect earnings or capital, could also cause
some depositors, particularly those who maintain uninsured
and uncollateralized deposits, to question the stability of
USBNA and to move their deposits away from USBNA.
Such events could negatively affect the Company’s
liquidity, financial condition and results of operations.
Changes in United States trade policies, including the
imposition of tariffs and retaliatory tariffs, may
adversely impact the Company’s business, financial
condition and results of operations There have been
recent changes to United States trade policies and tariffs,
including trade policies and tariffs affecting China, Canada
and Mexico, and the imposition of, or the potential for the
imposition of, retaliatory tariffs by such countries. There
could be additional changes to trade policies, tariffs and
treaties with these and other countries in the future. Such
tariffs, retaliatory tariffs or other trade restrictions on
products and materials that the Company’s customers
import or export could cause the prices of its customers’
products to increase, which could reduce demand for, or
margins on, such products. Any of these effects could
adversely affect the ability of the Company’s customers to
service debt. Additionally, if prices of consumer goods
increase materially as a result of tariffs, the ability of
individual households to service debt may be negatively
affected. If the Company’s customers are unable to service
their debt, it would adversely affect the Company’s financial
condition and results of operations. At this time, the
Company and others are unable to predict whether and to
what extent further tariffs and retaliatory tariffs may be
imposed or what effect changes in the U.S. political
administration may have on existing international trade
agreements and policies. This uncertainty complicates
business planning for the Company’s customers in certain
industries, which may adversely affect the Company’s
financial results if such customers change their spending
and borrowing patterns in response to the current
uncertainty.
Operations and Business Risk
A breach in the security of the Company’s information
systems, or the information systems of certain third
parties, or a critical technology failure could disrupt the
Company’s businesses, result in the disclosure of
confidential information, damage its reputation and
create significant financial and legal risk The Company
continues to experience an increasing number of attempted
attacks on its information systems, software, networks and
other technologies. The Company’s security measures may
not be effective against all threats, including new and
emerging threats. Malicious actors continue to develop
increasingly sophisticated methods of attack that could
impact the Company, including attack methods that are
aided by advanced artificial intelligence (“AI”) models and
other tools. Many financial institutions, retailers and other
companies engaged in data processing and collection,
including software and information technology service
providers, have reported cyber attacks, some of which
involved sophisticated and targeted attacks intended to
obtain unauthorized access to confidential information,
destroy or ransom data, disable or degrade service, or
sabotage systems, often through the introduction of
software that is intentionally included or inserted in an
information system for a harmful purpose (malware).
Attacks on government institutions, financial institutions,
technology service providers, or other institutions important
to the overall functioning of the financial system could also
adversely affect, directly or indirectly, aspects of the
Company’s businesses. The increasing consolidation,
interdependence and complexity of financial entities and
technology systems increases the risk of operational failure,
both for the Company and on an industry-wide basis, and
means that a technology failure, cyber attack, or other
breach that significantly degrades, deletes or compromises
the systems or data of one or more financial entities could
materially affect the Company, its counterparties or other
market participants.
Third parties that facilitate the Company’s business
activities, including exchanges, clearinghouses, payment
and ATM networks, financial intermediaries and vendors
that provide services or technology solutions for the
Company’s operations, are also sources of operational and
security risks to the Company due to operational or
technical failures of their systems, misconduct or
negligence by their employees or cyber attacks that could
affect their ability to deliver a product or service to the
Company, resulting in lost or compromised Company or
customer information. Furthermore, a third party may not
reveal an attack or system failure to the Company in a
timely manner, which could compromise the Company’s
ability to respond effectively. Some of these third parties
may engage vendors of their own, which introduces the risk
that the third party’s vendors and subcontractors could be
the source of operational and security failures. In addition, if
a third party obtains access to the customer account data
on the Company’s systems, and that party experiences a
breach via an external or internal threat or misappropriates
such data, the Company and its customers could suffer
material harm, including heightened risk of fraudulent
transactions, losses from fraudulent transactions, increased
operational costs to remediate any security breach and
legal and reputational harm. These risks are expected to
continue to increase as the Company expands its
interconnectivity with its customers and other third parties.
Within the past several years, multiple companies have
disclosed significant cybersecurity incidents affecting debit
and credit card accounts of their customers, some of whom
were the Company’s cardholders and who may experience
fraud on their card accounts because of the breach. The
138 U.S. Bancorp 2024 Annual Report
Company has suffered, and expects to suffer in the future,
losses associated with reimbursing its customers for such
fraudulent transactions and for other costs related to data
security compromise events, such as replacing cards
associated with compromised card accounts. These
attacks involving Company cards are expected to continue
and could, individually or in the aggregate, have a material
adverse effect on the Company’s financial condition or
results of operations.
The Company may not be able to anticipate or to
implement effective preventive measures against all cyber
attacks because malicious actor methods and techniques
change frequently, increase in sophistication, often are not
recognized until launched, sometimes go undetected even
when successful, and originate from a wide variety of
sources, including organized crime, hackers, terrorists,
activists, hostile foreign governments and other external
parties. Those parties may attempt to place their
information technology workers as employees or
contractors of the Company or the Company’s third-party
vendors to attempt to gain access to the Company’s
systems. Those parties may also attempt to fraudulently
induce employees, customers or other users of the
Company’s systems to disclose sensitive information to
gain access to the Company’s data or that of its customers
or clients, such as through “phishing” and other social
engineering schemes. For example, recent advances in AI
may allow a bad actor to create so-called “deep fakes” to
impersonate the voice or likeness of another individual,
which could be used in social engineering schemes that
may be more difficult to detect than other social
engineering efforts. Attack methods may include the
introduction of computer viruses and/or malicious or
destructive code, denial-of-service attacks (DDoS), and
cyber extortion with accompanying ransom demands. The
Company’s information security risks may increase in the
future as the Company continues to increase its mobile and
internet-based product offerings and expands its internal
usage of web-based products, data storage and other
applications. In addition, the Company’s customers often
use their own devices, such as computers, smart phones
and tablets, to make payments and manage their accounts,
and are subject to social engineering schemes, scam
websites, and other attempts from cyber criminals to
compromise or deny access to their accounts. The
Company has limited ability to assure the safety and
security of its customers’ transactions with the Company to
the extent they are using their own devices, which have
been, and likely will continue to be, subject to such threats.
If the Company’s physical or cybersecurity systems are
penetrated or circumvented, or an authorized user
intentionally or unintentionally removes, loses or destroys
critical business data, serious negative consequences for
the Company can follow, including significant disruption of
the Company’s operations, misappropriation of confidential
Company and/or customer information, or damage to the
Company’s, customers’ or counterparties’ computers or
systems. These consequences could result in violations of
privacy and other applicable laws; financial loss to the
Company or to its customers; loss of confidence in the
Company’s security measures; customer dissatisfaction;
significant litigation exposure; regulatory investigations,
fines, penalties or intervention; reimbursement or other
compensatory costs (including the costs of credit
monitoring services); additional compliance costs; and
harm to the Company’s reputation, all of which could
adversely affect the Company.
Because the investigation of any cybersecurity incident
is inherently unpredictable and would require substantial
time to complete, the Company may not be able to quickly
remediate the consequences of any incident, which may
increase the costs of, and enhance the negative
consequences associated with, an incident. In addition, to
the extent the Company’s insurance covers aspects of any
cybersecurity incident, such insurance may not be
sufficient to cover all the Company’s losses.
The Company relies on its employees, systems and
third parties to conduct its business, and certain
failures by systems or misconduct by employees or
third parties could adversely affect its operations The
Company operates in many different businesses in diverse
markets and relies on the ability of its employees and
systems to process a high number of transactions. The
Company’s business, financial, accounting, data
processing, and other operating systems and facilities may
stop operating properly or become disabled or damaged
due to a number of factors, including events that are out of
its control. In addition to the risks posed by cybersecurity
incidents, as discussed above, such systems could be
compromised because of spikes in transaction volume,
electrical or telecommunications outages, critical
technology failures, degradation or loss of internet or
website availability, natural disasters, political or social
unrest, and terrorist acts. The Company’s business
operations may be adversely affected by significant
disruption to the operating systems that support its
businesses and customers. The Company’s resiliency
systems could become compromised, which could
negatively impact the ability to back up data.
The Company could also incur losses resulting from the
risk of human error by employees, misconduct or fraud by
employees or persons outside the Company, unauthorized
access to its computer systems, the execution of
unauthorized transactions by employees, errors relating to
transaction processing and technology, breaches of the
internal control system and compliance requirements, and
failures of business continuation and disaster recovery
processes and systems. This risk of loss also includes
customer remediation costs, potential legal actions, fines or
civil money penalties that could arise resulting from an
operational deficiency or noncompliance with applicable
regulatory standards, adverse business decisions or their
implementation, reputational harm, and customer attrition
due to potential negative publicity.
Third parties provide key components of the Company’s
business infrastructure, such as internet connections, cloud
services, network access and mutual fund distribution. Any
problems caused by third-party service providers,
including failing to comply with their contractual obligations
or performing their services negligently, which could cause
139
critical technology failures, could adversely affect the
Company’s ability to deliver products and services to the
Company’s customers and otherwise conduct its business.
Replacing third-party service providers could also entail
significant delay and expense. In addition, failure of third-
party service providers to handle current or higher volumes
of use could adversely affect the Company’s ability to
deliver products and services to clients and otherwise
conduct its business. Technological or financial difficulties
of a third-party service provider could adversely affect the
Company’s businesses to the extent those difficulties result
in the interruption or discontinuation of services provided
by that party.
Operational risks for large financial institutions such as
the Company have generally increased in recent years, in
part because of the proliferation of new technologies,
implementation of work-from-home and hybrid work
arrangements, the use of internet services and
telecommunications technologies to conduct financial
transactions, the increased number and complexity of
transactions being processed, and the increased
sophistication and activities of organized crime, hackers,
terrorists, activists, and other external parties. In the event
of a breakdown in the Company’s internal control systems,
improper operation of systems or improper employee or
third-party actions, the Company could suffer financial loss,
face legal or regulatory action and suffer damage to its
reputation.
The Company could face material legal and reputational
harm if it fails to safeguard personal information The
Company is subject to complex and evolving laws and
regulations, both inside and outside the United States,
governing the privacy and protection of personal
information. Individuals whose personal information may be
protected by law include the Company’s customers and
their customers, prospective customers, job applicants,
current and former employees, employees of the
Company’s suppliers, and other individuals. Complying
with laws and regulations applicable to the Company’s
collection, use, transfer and storage of personal information
can increase operating costs, impact the development and
marketing of new products or services, and reduce
operational efficiency. Mishandling or misuse of personal
information by the Company or its suppliers, including data
breaches at third parties exposing personal information that
have occurred and could occur in the future, have resulted
in litigation against the Company and could result in
additional litigation or regulatory fines, penalties or other
sanctions in the future. For example, in 2024, a state
attorney general filed a claim in federal court against a
bank for alleged failure to protect consumer accounts from
fraud.
In the United States, several states have enacted
consumer privacy laws that impose compliance obligations
with respect to personal information. In particular, the
California Consumer Privacy Act (the ”CCPA”), as amended
by the California Privacy Rights Act, and its implementing
regulations impose significant requirements on covered
businesses with respect to consumer data privacy rights.
Compliance with the CCPA and other state statutes,
common law, or regulations designed to protect personal
information could potentially require substantial technology
infrastructure and process changes across many of the
Company’s businesses. Non-compliance with the CCPA or
similar laws and regulations could lead to substantial
regulatory fines and penalties, damages from private
causes of action, compelled changes to the Company’s
business practices, and/or reputational harm. The
Company cannot predict whether any pending or future
state or federal legislation will be adopted, or the impact of
any such adopted legislation on the Company. Future
legislation could result in substantial costs to the Company
and could have an adverse effect on its business, financial
condition, and results of operations.
In addition, legal requirements for cross-border personal
data transfers vary across jurisdictions, such as in the
European Economic Area and the United Kingdom, and are
evolving rapidly. Compliance with this changing landscape
of privacy requirements could potentially compel the
Company to make significant technological and operational
changes, any of which could result in substantial costs to
the Company, and failure to comply with applicable data
transfer or privacy requirements could subject the
Company to fines or regulatory investigation or oversight.
Additional risks could arise from the failure of the
Company or third parties to provide adequate notice to the
Company’s customers about the personal information
collected from them and the use of such information; to
receive, document, and honor the privacy preferences
expressed by the Company’s customers; to protect
personal information from unauthorized disclosure; or to
maintain proper training on privacy practices for all
employees or third parties who have access to personal
information. Concerns regarding the effectiveness of the
Company’s measures to safeguard personal information
and abide by privacy preferences, or even the perception
that those measures are inadequate or that the Company
does not abide by such privacy preferences, could cause
the Company to lose existing or potential customers and
thereby reduce its revenues. In addition, any failure or
perceived failure by the Company to comply with
applicable privacy or data protection laws and regulations
has subjected, and may in the future subject, the Company
to litigation and could result in requirements to modify or
cease certain operations or practices, and/or incur material
liabilities or regulatory fines, penalties, or other sanctions.
Refer to “Supervision and Regulation” in the Company’s
Annual Report on Form 10-K for additional information
regarding data privacy laws and regulations. Any of these
outcomes could materially damage the Company’s
reputation and otherwise adversely affect its business.
The Company could lose market share and experience
increased costs if it does not effectively develop and
implement new technology The financial services industry
is continually undergoing rapid technological change with
frequent introductions of new technology-driven products
and services, including innovative ways that customers can
make payments or manage their accounts, such as through
the use of mobile payments, digital wallets or digital
currencies. The Company believes its success depends, in
140 U.S. Bancorp 2024 Annual Report
part, upon its ability to address customer needs by using
technology to provide products and services and create
additional efficiencies in the Company’s operations. When
launching a new product or service or introducing a new
platform for the delivery of products and services, the
Company might not identify or fully appreciate the
operational risks arising from those innovations or might
inadvertently fail to implement adequate controls to mitigate
those risks. Developing and deploying new technology-
driven products and services can also involve costs that
the Company may not recover and divert resources away
from other product development efforts. The Company’s
products and services may also rely on certain hardware,
software, or service companies for which there are few
alternatives, and the costs charged by these vendors may
increase significantly year to year. In addition to the risk
posed by critical technology failures, the Company may not
be able to effectively develop and implement profitable new
technology-driven products and services or be successful
in marketing these products and services to its customers.
Failure to successfully keep pace with technological
change affecting the financial services industry, including
because competitors may spend more resources on
developing new technologies or because non-bank
competitors have a lower cost structure and more flexibility,
could harm the Company’s competitive position and
negatively affect its revenue and profit.
The use of new technologies, including AI and machine
learning, may result in reputational harm, increased
regulatory scrutiny and increased liability The banking
industry is subject to rapid and significant technological
change. To compete effectively, the Company uses new
and evolving technologies, including AI and machine
learning, to help improve its customer service, marketing,
and products, to increase productivity for internal code
development and testing, and to automate certain business
decisions and risk management practices, such as fraud
identification. The Company's use of AI and machine
learning is subject to risks that algorithms and datasets are
flawed or may be insufficient or contain biased information.
In addition, the models and processes relating to AI and
machine learning are not always transparent, which could
increase the risk of unintended deficiencies. These
deficiencies could result in inaccurate or ineffective
decisions, predictions or analysis, which could subject the
Company to competitive harm, legal liability, increased
regulatory scrutiny, reputational harm or other
consequences that the Company may not be able to
predict, any of which could negatively affect the Company's
financial condition and results of operations. Furthermore,
the legal and regulatory landscape impacting new
technologies such as AI is evolving rapidly, and the inability
to predict how this regulation will take shape and the
absence of a uniform regulatory framework for AI may
present unforeseen challenges in applying and relying on
existing compliance systems. Complying with existing and
new AI and data usage laws, and inconsistencies in
regulation from jurisdiction to jurisdiction, could increase
expenses and exposure to legal or regulatory proceedings.
Damage to the Company’s reputation could adversely
impact its business and financial results Reputation risk,
or the risk to the Company’s business, earnings and capital
from negative public opinion, is inherent in the Company’s
business. Negative public opinion about the financial
services industry generally or the Company specifically
could adversely affect the Company’s ability to retain and
attract stakeholders such as customers, investors, and
employees and could expose the Company to litigation and
regulatory action. Negative public opinion can result from
the Company’s actual or alleged conduct in any number of
activities, including lending practices, cybersecurity
incidents, misuse or failure to safeguard personal
information, inability to meet community and other
stakeholder commitments, discriminating or harassing
behavior of employees toward other employees or
customers, mortgage servicing and foreclosure practices,
compensation practices, sales practices, regulatory
compliance, mergers and acquisitions, and actions taken
by government regulators and community organizations in
response to that conduct. Additionally, the Company’s
stakeholders often hold differing views on how the
Company should address environmental, social and
sustainability matters, including diversity-related matters,
and the Company may not be able to meet the diverging
expectations of different stakeholder groups, which could
result in negative attention in traditional and social media,
resulting in a negative perception of the Company
depending on an individual’s view. In addition, failure to
make accurate disclosures on these or other topics, or to
deliver against announced goals, commitments and plans
on these or other topics, could present reputational, legal
and financial harm to the Company. If the Company is
unable to design or execute against business strategies,
including with respect to environmental, social or
sustainability matters, reputational damage could result,
leading to a loss of customers or negative investor
sentiment.
The Company’s business and financial performance
could be adversely affected, directly or indirectly, by
natural disasters, pandemics, terrorist activities, civil
unrest or international hostilities Neither the occurrence
nor the potential impact of natural disasters, pandemics,
terrorist activities, civil unrest or international hostilities can
be predicted. However, these occurrences could impact
the Company directly (for example, by interrupting the
Company’s systems, which could prevent the Company
from obtaining deposits, originating loans and processing
and controlling its flow of business; causing significant
damage to the Company’s facilities; or otherwise
preventing the Company from conducting business in the
ordinary course), or indirectly as a result of their impact on
the Company’s borrowers, depositors, other customers,
vendors or other counterparties (for example, by damaging
properties pledged as collateral for the Company’s loans or
impairing the ability of certain borrowers to repay their
loans). The Company has also suffered, and could in the
future suffer, adverse consequences to the extent that
natural disasters, pandemics, terrorist activities, civil unrest
or international hostilities, including the ongoing war in
141
Ukraine and conflict in the Middle East, affect the financial
markets or the economy in general or in any particular
region. These occurrences have caused, and may in the
future cause, operational disruptions and increases in
delinquencies, bankruptcies or defaults that could result in
the Company experiencing higher levels of nonperforming
assets, net charge-offs and provisions for credit losses.
The United States has in recent years faced periods of
significant civil unrest. Although civil unrest has not
materially affected the Company’s businesses to date,
similar events could, directly or indirectly, have a material
adverse effect on the Company’s operations (for example,
by causing shutdowns of branches or working locations of
vendors or other counterparties or damaging property
pledged as collateral for the Company’s loans).
The Company’s ability to mitigate the adverse
consequences of these occurrences is in part dependent
on the quality of the Company’s resiliency planning and the
Company’s ability, if any, to anticipate the nature of any
such event that occurs. The adverse effects of natural
disasters, pandemics, terrorist activities, civil unrest or
international hostilities also could be increased to the extent
there is a lack of preparedness on the part of national or
regional emergency responders or on the part of other
organizations and businesses that the Company transacts
with, particularly those that it depends upon, but has no
control over.
The Company’s business strategy, operations, financial
performance and customers could be materially
adversely affected by the impacts related to climate
change Risks associated with climate change have
affected, and may continue to affect, the Company and its
customers and communities. The physical risks of climate
change include chronic shifts in the climate, such as
increasing average global temperatures, rising sea levels
and an increase in the frequency and severity of extreme
weather events and natural disasters, including wildfires,
floods, tornadoes and hurricanes. The financial costs
related to natural disasters have increased in recent years
and may continue to do so in the future based on multiple
factors. Such chronic shifts and disasters could disrupt the
Company’s businesses and operations or the businesses
and operations of the Company’s customers, vendors or
counterparties, particularly with respect to those located in
low-lying areas and coastlines that are more prone to
flooding or other areas that are prone to wildfires and other
disasters. Such chronic shifts and disasters could also
adversely affect the Company’s business strategy and
financial performance by, among other impacts, resulting in
market volatility, negatively impacting customers’ ability to
pay outstanding loans or fulfill other contractual obligations,
damaging collateral or resulting in the deterioration of the
value of collateral, or reducing availability or increasing
costs of insurance, including insurance that protects
property pledged as collateral for Company loans.
To the extent the United States and global economies
continue to transition to a low-carbon economy, transition
risks may arise from changes in consumer preferences,
technologies, public policies, and legal and regulatory
requirements. New laws and regulations could result in
significant costs as the Company implements compliance,
disclosure and other programs. Failure to comply with any
applicable laws or regulations could result in legal or
regulatory sanctions and harm to the Company’s
reputation. Failure to adequately consider transition risks in
the Company’s operations could lead to a loss of market
share, lower revenues, decreased asset values and higher
credit costs. For example, a transition to a low-carbon
economy could negatively affect the business of customers
in carbon-intensive industries and reduce their
creditworthiness.
These physical risks and transition risks could increase
expenses or otherwise adversely impact the Company’s
business strategy, operations, financial performance and
customers. In particular, new laws, regulations or guidance,
or the attitudes of regulators, shareholders, employees and
customers regarding climate change, may affect the
activities in which the Company engages and the products
that the Company offers. An inability to adjust the
Company’s business to mitigate the effects of physical and
transition risks could result in higher operational and credit
losses. In addition, the Company’s stakeholders’ views on
climate change are diverse, dynamic, and rapidly
changing, and the Company may not be able to meet the
diverging expectations and priorities of different
stakeholder groups, including regulators in different
jurisdictions as further discussed in the risk factor “The
Company is subject to significant financial and reputation
risks from potential legal liability and governmental
actions”. The Company could also experience increased
expenses resulting from strategic planning, litigation and
technology and market changes, and reputational harm as
a result of negative public sentiment, regulatory scrutiny
and reduced investor and stakeholder confidence due to
the Company’s response to climate change and the
Company’s climate change strategy.
Risks associated with climate change are continuing to
evolve rapidly, making it difficult to assess the effects of
climate change on the Company, and the Company
expects that climate change-related risks will continue to
evolve and increase over time.
Regulatory and Legal Risk
The Company is subject to extensive and evolving
government regulation and supervision, which can
increase the cost of doing business, limit the
Company’s ability to make investments and generate
revenue, and lead to costly enforcement actions
Banking regulations are primarily intended to protect
depositors’ funds, the federal Deposit Insurance Fund, and
the United States financial system as a whole, and not the
Company’s debt holders or shareholders. These
regulations, and the Company’s inability to act in certain
instances without receiving prior regulatory approval, affect
the Company’s lending practices, capital structure,
investment practices, dividend policy, ability to repurchase
common stock, and ability to pursue strategic acquisitions,
among other activities.
The Company expects that its business will remain
subject to extensive regulation and supervision and that the
142 U.S. Bancorp 2024 Annual Report
level of scrutiny and the enforcement environment may
fluctuate over time, based on numerous factors, including
bank failures, changes in the United States presidential
administration or one or both houses of Congress and
public sentiment regarding financial institutions (which can
be influenced by scandals and other incidents that involve
participants in the industry). In particular, recent changes in
national political leadership have introduced uncertainty
into the direction and timing of any future regulation. The
Company expects the Trump administration will seek to
implement a regulatory reform agenda that is significantly
different than that of the Biden administration, impacting the
rulemaking, supervision, examination and enforcement
priorities of the federal banking agencies. Any potential
new regulations or modifications to existing regulations and
supervisory expectations may necessitate changes to the
Company’s existing regulatory compliance and risk
management infrastructure. In addition, changes in key
personnel at the agencies that regulate the Company,
including federal banking regulators, may result in differing
interpretations of existing rules and guidelines and
potentially more stringent enforcement and more severe
penalties than previously experienced. In June 2024, the
U.S. Supreme Court reversed its longstanding approach
under the Chevron doctrine, which provided for judicial
deference to regulatory agencies. As a result of this
decision, there may be increased challenges to existing
agency regulations, and it is uncertain how lower courts will
apply the decision in the context of other regulatory
schemes.
New regulations or modifications to existing regulations
and supervisory expectations have increased, and may in
the future increase, the Company’s costs over time and
necessitate changes to the Company’s existing regulatory
compliance and risk management infrastructure. In
addition, regulatory changes may reduce the Company’s
revenues (including by limiting the fees the Company may
charge), limit the types of financial services and products it
may offer, alter the investments it makes, affect the manner
in which it operates its businesses, increase its litigation
and regulatory costs should it fail to appropriately comply
with new or modified laws and regulatory requirements, and
increase the ability of non-banks to offer competing
financial services and products.
Changes to statutes, regulations or regulatory policies,
or their interpretation or implementation, and/or regulatory
practices, requirements or expectations, could affect the
Company in substantial and unpredictable ways.
Complying with regulatory changes has at times resulted in
significant expense for the Company, and these and other
future regulatory changes could result in further significant
expenses which could materially affect the Company’s
financial condition and results of operations. In particular,
regulators have proposed a number of regulations that, if
they were to become effective, would affect the Company’s
fee revenues and increase compliance costs for the
Company. The potential effects on the Company remain
uncertain due to legal challenges to many of the regulations
as well as the recent changes in the U.S. presidential
administration and control of the U.S. Senate, which are
likely to result in changing federal or state regulatory
priorities. Any shifts in state or federal regulatory priorities
may also result in increased compliance costs and
regulatory risks as new regulations are issued and
enforcement priorities shift. Failure to comply with any new
law or regulation could result in litigation, regulatory
enforcement actions and harm to the Company’s
reputation.
General regulatory practices, such as longer time
frames to obtain regulatory approvals for acquisitions and
other activities (and the resultant impact on businesses the
Company may seek to acquire) and initiatives to reduce
fees on certain products, could affect the Company’s ability
or willingness to make certain acquisitions or introduce new
products or services. These could affect the Company’s
ability or willingness to provide certain products or
services, necessitate changes to the Company’s business
practices or reduce the Company’s revenues.
Federal law grants substantial supervisory and
enforcement powers to federal banking regulators and law
enforcement agencies, including, among other things, the
ability to assess significant civil or criminal monetary
penalties, fines, or restitution; to issue cease and desist or
removal orders; and to initiate injunctive actions against
banking organizations and institution-affiliated parties. The
financial services industry continues to face scrutiny from
bank supervisors in the examination process and stringent
enforcement of regulations on both the federal and state
levels, including with respect to mortgage-related
practices, fair lending practices, fees charged by banks,
student lending practices, sales practices and related
incentive compensation programs, and other consumer
compliance matters, as well as compliance with Bank
Secrecy Act/anti-money laundering (“BSA/AML”)
requirements and sanctions compliance requirements as
administered by the Office of Foreign Assets Control, and
consumer protection issues more generally. This regulatory
scrutiny, or the results of an investigation or examination,
may lead to additional regulatory investigations or
enforcement actions. There is no assurance that those
actions will not result in regulatory settlements or other
enforcement actions against the Company or any of the
Company’s subsidiaries (including USBNA), which could
cause the Company material financial and reputational
harm. Furthermore, a single event involving a potential
violation of law or regulation may give rise to numerous and
overlapping investigations and proceedings, either by
multiple federal and state agencies and officials in the
United States or, in some instances, regulators and other
governmental officials in foreign jurisdictions. In addition,
another financial institution’s violation of law or regulation
relating to a business activity or practice often will give rise
to an investigation of the same or similar activities or
practices of the Company.
In general, the amounts paid by financial institutions in
settlement of proceedings or investigations and the severity
of other terms of regulatory settlements are likely to remain
elevated. In some cases, governmental authorities have
required criminal pleas or other extraordinary terms,
including admissions of wrongdoing and the imposition of
143
monitors, as part of such settlements, which could have
significant consequences for a financial institution,
including loss of customers, reputational harm, increased
exposure to civil litigation, restrictions on the ability to
access the capital markets, and the inability to operate
certain businesses or offer certain products for a period of
time.
Non-compliance with sanctions laws and/or BSA/AML
laws or failure to maintain an adequate BSA/AML
compliance program can lead to significant monetary
penalties and reputational damage. In addition, federal
regulators evaluate the effectiveness of an applicant in
combating money laundering when determining whether to
approve a proposed bank merger, acquisition,
restructuring, or other expansionary activity. There have
been a number of significant enforcement actions against
banks, broker-dealers and non-bank financial institutions
with respect to sanctions laws and BSA/AML laws, and
some have resulted in substantial penalties, including
against the Company and USBNA in 2018. The adoption of
cryptocurrency and blockchain technology has rapidly
expanded in recent years, and future regulatory changes
may lead to additional growth of digital assets.
Cryptocurrency and other new forms of payment have
resulted in increased BSA/AML compliance risks,
particularly with respect to “know-your-customer” and
transaction monitoring requirements.
Violations of laws and regulations or deemed
deficiencies in risk management practices or consumer
compliance also may be incorporated into the Company’s
confidential supervisory ratings. A downgrade in these
ratings, or these or other regulatory actions and
settlements, could limit the Company’s ability to conduct
expansionary activities for a period of time and require new
or additional regulatory approvals before engaging in
certain other business activities.
Differences in regulation can affect the Company’s
ability to compete effectively The content and application
of laws and regulations applicable to financial institutions
vary according to the size of the institution, the jurisdictions
in which the institution is organized and operates and other
factors. Large institutions, such as the Company, often are
subject to more stringent regulatory requirements and
supervision than smaller institutions. In addition, financial
technology companies and other non-bank competitors
may not be subject to the prudential and consumer
protection regulatory framework that applies to banks, or
may be regulated by a national or state agency that does
not have the same regulatory priorities or supervisory
requirements as the Company’s regulators. These
differences in regulation can impair the Company’s ability
to compete effectively with competitors that are less
regulated and that do not have similar compliance costs or
restrictions on activities.
Stringent requirements related to capital and liquidity
are applicable to larger banking organizations,
including the Company, that may limit the Company’s
ability to return earnings to shareholders or operate or
invest in its business If enacted as proposed, the “Basel
III Endgame” rules would result in significant changes to
regulatory capital rules applicable to the Company. The
Company expects that, if adopted, the final rules will result
in requirements for the Company to maintain increased
levels of regulatory capital. These and other future changes
to the implementation of these rules including the stress
capital buffer, or additional capital- and liquidity-related
rules, could require the Company to take further steps to
increase its capital, increase its investment security
holdings, divest assets or operations, or otherwise change
aspects of its capital and/or liquidity measures, including in
ways that may be dilutive to shareholders or could limit the
Company’s ability to pay common stock dividends,
repurchase its common stock, invest in its businesses or
provide loans to its customers.
The effects of external events and actions by the Federal
Reserve Board have in the past limited and may in the
future limit capital distributions, including suspension of the
Company’s share repurchase program or reduction or
suspension of the Company’s common stock dividend. In
addition, bank failures in 2023 and the results of regulatory
investigations into the failures has resulted in, and could
result in further, increased regulatory scrutiny and
heightened regulatory requirements, any of which could
require the Company to expend significant time and effort
to implement appropriate compliance procedures or to
incur other expenses, and could negatively affect the
Company’s financial condition or results of operations.
Further, in August 2023, the Federal Reserve Board,
OCC and FDIC issued a proposed rule that would require,
among other institutions, each Category III U.S. bank
holding company, including the Company, and each
insured depository institution with $100 billion or more in
total consolidated assets that is a consolidated subsidiary
of a Category III U.S. bank holding company, such as
USBNA, to have minimum levels of outstanding long-term
debt. The proposed rule is intended to improve the
resolvability of the banking organizations covered by the
rule. Any effects on the Company and USBNA will depend
on the final form of any rulemaking, and may require the
Company to change its current funding mix, including
being required to raise additional long-term debt, which
could adversely impact net interest margin and net interest
income.
Refer to “Supervision and Regulation” in the Company’s
Annual Report on Form 10-K for additional information
regarding the Company’s capital and liquidity
requirements.
The Company is subject to significant financial and
reputation risks from potential legal liability and
governmental actions The Company faces significant
legal risks in its businesses, and the volume of claims and
amount of damages and penalties claimed in litigation and
governmental proceedings against it and other financial
institutions are substantial. Customers, clients and other
counterparties make claims for substantial or indeterminate
amounts of damages, while banking regulators and certain
other governmental authorities have focused on
enforcement. The Company is named as a defendant or is
otherwise involved in many legal proceedings, including
144 U.S. Bancorp 2024 Annual Report
class actions and other litigation. As a participant in the
financial services industry, it is likely that the Company will
continue to experience a high level of litigation and
government scrutiny related to its businesses and
operations in the future. Substantial legal liability or
significant governmental action against the Company could
materially impact the Company’s financial condition and
results of operations (including because such matters may
be resolved for amounts that exceed established accruals
for a particular period) or cause significant reputational
harm to the Company.
For example, banking organizations have been subject
to claims regarding patent infringement or other violations
of intellectual property rights in recent years which, in some
cases, have resulted in large judgments against the banks.
Such claims have in the past been brought against the
Company, and if the Company is not successful in
defending such claims or if new claims are brought or
damages sought increase, the Company may incur
substantial costs in defending such claims, regardless of
their merit. If such claims are successful, the Company
could be required to pay substantial damages and could
suffer reputational and other harm.
In addition, lawmakers and regulators have proposed or
adopted expansive requirements on environmental, social
and sustainability matters. These requirements are
emerging and evolving rapidly, and some have been
subject to judicial challenges, leading to significant legal
uncertainty. The diverging approach of lawmakers and
regulators on these matters further amplify such
uncertainty. For example, some states in which the
Company does business have implemented “anti-ESG”
measures and may seek to implement additional measures
in the future. Such measures may conflict with other
regulatory requirements, including requirements to
enhance environmental, social and sustainability-related
disclosures and efforts imposed by other jurisdictions in
which the Company operates, or be inconsistent with the
expectations of certain Company customers and
shareholders. If the Company fails to comply with evolving,
and possibly conflicting, legal and regulatory requirements,
it could harm the Company’s ability to continue to conduct
business in one or more of the jurisdictions in which the
Company currently operates, or could otherwise harm the
Company’s business.
The Company may be required to repurchase mortgage
loans or indemnify mortgage loan purchasers as a
result of breaches in contractual representations and
warranties When the Company sells mortgage loans that it
has originated to various parties, including GSEs, it is
required to make customary representations and warranties
to the purchaser about the mortgage loans and the manner
in which they were originated. The Company may be
required to repurchase mortgage loans or be subject to
indemnification claims in the event of a breach of
contractual representations or warranties that is not
remedied within a certain period. Contracts for residential
mortgage loan sales to the GSEs include various types of
specific remedies and penalties that could be applied if the
Company does not adequately respond to repurchase
requests. If economic conditions and the housing market
deteriorate or the GSEs increase their claims for breached
representations and warranties, the Company could have
increased repurchase obligations and increased losses on
repurchases, requiring material increases to its repurchase
reserve.
The Company’s failure to satisfy its obligations as
servicer for consumer loan securitizations and
residential mortgage loans owned by other entities, and
other losses the Company could incur as servicer,
could adversely impact the Company’s reputation,
servicing costs or results of operations The Company
services both automobile and unsecured consumer
installment loans on behalf of third-party securitization
vehicles and also acts as servicer and master servicer for
mortgage loans included in securitizations and for
unsecuritized mortgage loans owned by investors. As a
servicer or master servicer for those loans, the Company
has certain contractual obligations to the securitization
trusts, investors, or other third parties. As a servicer, the
Company’s obligations include collecting all payments due
by the borrower consistent with accepted servicing
practices and applicable law, which in the case of borrower
delinquency or default may include, as applicable to the
loan, considering alternatives to repossession or
foreclosure upon the collateral securing the loan, such as
loan modifications or short sales. In the Company’s
capacity as a master servicer, obligations include
overseeing the servicing of mortgage loans by the servicer.
Generally, the Company’s servicing obligations are set by
contract, for which the Company receives a contractual fee.
However, with respect to mortgage loans, GSEs can amend
their servicing guidelines, which can increase the scope or
costs of the services required without any corresponding
increase in the Company’s servicing fee. As a servicer, the
Company also advances expenses on behalf of investors
which it may be unable to collect. A material breach of the
Company’s obligations as servicer or master servicer may
result in contract termination if the breach is not cured
within a specified period of time following notice which
would negatively impact the Company’s ongoing servicing
fee compensation and could adversely impact the
Company’s reputation. In addition, the Company may be
required to indemnify the securitization trustee against
losses from any failure by the Company, as a servicer or
master servicer, to perform the Company’s servicing
obligations or any act or omission on the Company’s part
that involves willful misfeasance, bad faith, or gross
negligence. For certain investors and certain transactions,
the Company may be contractually obligated to repurchase
a loan or reimburse the investor for credit losses incurred
on the loan as a remedy for servicing errors with respect to
the loan or a result of claims made that the Company did
not satisfy its obligations as a servicer or master servicer.
The Company may also experience increased loss severity
on repurchases, which may require a material increase to
the Company’s repurchase reserve. The Company has and
may continue to receive indemnification requests related to
the Company’s servicing of mortgage loans owned or
insured by other parties, primarily GSEs.
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Credit and Mortgage Business Risk
Heightened credit risk could require the Company to
increase its provision for credit losses, which could
have a material adverse effect on the Company’s results
of operations and financial condition When the Company
lends money, or enters into commitments to lend money, it
incurs credit risk, or the risk of loss if its borrowers do not
repay their loans. The credit performance of the Company’s
loan portfolios significantly affects its financial results and
condition. If the current economic environment were to
worsen, the Company’s customers may have more difficulty
in repaying their loans or other obligations, which could
result in a higher level of credit losses and higher
provisions for credit losses. Stress on the United States
economy or the local economies in which the Company
does business, including the economic stress caused by
high commercial real estate vacancy rates, escalating
geopolitical tensions, trade tariffs or other fiscal policies,
and elevated interest rates and inflation has resulted, and in
the future may result, in, among other things, borrowers’
inability to refinance loans at maturity and unexpected
deterioration in credit quality of the loan portfolio or in the
value of collateral securing those loans, which has caused,
and in the future could cause, the Company to establish
higher provisions for credit losses.
The Company reserves for credit losses by establishing
an allowance through a charge to earnings to provide for
loan defaults and nonperformance. The Company’s
allowance for credit losses is compliant with CECL
accounting guidance, under which the allowance for credit
losses reflects the Company’s expected lifetime loss
estimates of the portfolio. The allowance for credit losses is
constructed based on an evaluation of the risks associated
with its loan portfolio, including the size and composition of
the loan portfolio, the portfolio’s historical loss experience,
current and foreseeable economic conditions and borrower
financial condition and collateral value. These forecasts
and estimates require difficult, subjective, and complex
judgments, including forecasts of economic conditions and
how these economic predictions might impair the ability of
the Company’s borrowers to repay their loans. The
Company may not be able to accurately predict these
economic conditions and/or some or all of their effects,
which may, in turn, negatively impact the reliability of the
process. The Company also makes loans to borrowers
where it does not have or service the loan with the first lien
on the property securing its loan. For loans in a junior lien
position, the Company may not have access to information
on the position or performance of the first lien when it is
held and serviced by a third party, which may adversely
affect the accuracy of the loss estimates for loans of these
types. Increases in the Company’s allowance for loan
losses may not be adequate to cover actual loan losses,
and future provisions for loan losses could materially and
adversely affect its financial results. In addition, the
Company’s ability to assess the creditworthiness of its
customers may be impaired if the models and approaches
it uses to select, manage, and underwrite its customers
become less predictive of future behaviors.
A concentration of credit and market risk in the
Company’s loan portfolio could increase the potential
for significant losses The Company may have higher
credit risk, or experience higher credit losses, to the extent
its loans are concentrated by loan type, industry segment,
borrower type, or location of the borrower or collateral. For
example, high vacancy rates in commercial properties may
affect the value of commercial real estate, including by
causing the value of properties securing commercial real
estate loans to be less than the amounts owed on such
loans. In addition, elevated interest rates may make it more
difficult for borrowers to refinance maturing loans. Any of
these or other events could increase the level of defaults
and result in higher credit losses to the Company. The
Company’s credit risk and credit losses can also increase if
borrowers who engage in similar activities are uniquely or
disproportionately affected by economic or market
conditions, or by regulation, such as regulation related to
climate change. Deterioration in economic conditions or
real estate values in states or regions where the Company
has relatively larger concentrations of residential or
commercial real estate could result in higher credit costs.
For example, the Company’s acquisition of MUB increased
the Company’s exposure to the markets in California.
Deterioration in real estate or collateral values and
underlying economic conditions in California, including as a
result of wildfires, could result in higher credit losses to the
Company.
Changes in interest rates can impact the value of the
Company’s mortgage servicing rights and mortgages
held for sale, and can make its mortgage banking
revenue volatile from quarter to quarter, which can
reduce its earnings The Company has a portfolio of MSRs,
which is the right to service a mortgage loan—collect
principal, interest and escrow amounts—for a fee. The
Company’s MSR portfolio had a fair value of $3.4 billion as
of December 31, 2024. The Company initially carries its
MSRs using a fair value measurement of the present value
of the estimated future net servicing income, which
includes assumptions about the likelihood of prepayment
by borrowers. Changes in interest rates can affect
prepayment assumptions and thus fair value. When interest
rates fall, prepayments tend to increase as borrowers
refinance, and the fair value of MSRs can decrease, which
in turn reduces the Company’s earnings. Further, it is
possible that, because of economic conditions such as a
weak or deteriorating housing market, even when interest
rates fall, mortgage originations may fall or any increase in
mortgage originations may not be enough to offset the
decrease in the MSRs’ value caused by the lower rates.
Decreased purchase volume by GSEs or limits on the
Company’s access to the mortgage secondary market
and GSEs could adversely affect the Company’s
revenue and capacity to fund new loans The Company
sells a portion of the mortgage loans that it originates to
increase revenue through origination fees and ongoing
servicing of such loans and to provide funding capacity for
originating additional loans. GSEs could limit their
purchases of conforming loans due to capital constraints,
146 U.S. Bancorp 2024 Annual Report
other changes in their criteria for conforming loans or other
reasons. This potential reduction in purchases could limit
the Company’s ability to fund new loans. In addition, if
GSEs limit their purchases of conforming loans, the
Company may limit its originations of mortgage loans that it
intends to sell, which could reduce the Company’s revenue
from origination fees of such loans and the ongoing
servicing fees it receives from such loans. Proposals have
been presented to reform the housing finance market in the
U.S., including the role of the GSEs in the residential
finance market. The extent and timing of any such
regulatory reform of the housing finance market and the
GSEs, as well as any effect on the Company’s business
and financial results, are uncertain.
A decline in the soundness, strength or stability of
other financial institutions could adversely affect the
Company’s results of operations Actual or perceived
issues with, or rumors or questions about, one or more
financial institutions, or about the financial services industry
more generally, have led to, and may in the future lead to,
among other things: market-wide liquidity problems; rapid
and significant deposit withdrawals at certain institutions,
particularly those with elevated levels of uninsured
deposits; losses or defaults by certain institutions, up to
and including failures of banks; significant volatility in the
stock of financial services institutions; and an increase in
fear or skepticism of the safety of banks generally. In
addition, the Company’s ability to engage in routine funding
or settlement transactions could be adversely affected by
any of these events or by other events that affect the
commercial soundness of other domestic or foreign
financial institutions. Failures of banks that are unrelated to
USBNA have increased, and may in the future increase,
USBNA’s deposit insurance assessments, such as the
FDIC’s special assessment relating to bank failures that
occurred in 2023. In addition, customers and others may
seek to make comparisons between failed or failing banks
and USBNA, which, even if unfounded, can spread quickly
through social media or other online channels. Such
comparisons could affect customer confidence in USBNA
and lead to deposit withdrawals or other negative effects
the Company is unable to predict, any of which could
materially and negatively affect the Company’s results of
operations and financial condition. In addition, due to the
prevalence of mobile banking and the ease with which
customers can withdraw funds, deposits can now be
withdrawn at a significantly faster pace than in the past (as
was evidenced in the 2023 bank failures).
Financial services institutions are interrelated as a result
of trading, clearing, counterparty or other relationships. The
Company has exposure to many different counterparties,
and the Company routinely executes and settles
transactions with counterparties in the financial services
industry, including brokers and dealers, commercial banks,
investment banks, mutual and hedge funds, and other
institutional counterparties. As a result, defaults by, or even
rumors or questions about the soundness, strength or
stability of, one or more financial services institutions, or the
financial services industry generally, could lead to losses or
defaults by the Company or by other institutions and impact
the Company’s predominately United States–based
businesses or the merchant processing, corporate trust
and fund administration services businesses it operates in
foreign countries. Many of these transactions expose the
Company to credit risk in the event of a default by a
counterparty or client. In addition, the Company’s credit risk
may be further increased when the collateral held by the
Company cannot be realized upon or is liquidated at prices
not sufficient to recover the full amount of the financial
instrument exposure due the Company. Any such losses
could adversely affect the Company’s results of operations.
Change in residual value of leased assets may have an
adverse impact on the Company’s financial results The
Company engages in leasing activities and is subject to the
risk that the residual value of the property under lease will
be less than the Company’s recorded asset value. Adverse
changes in the residual value of leased assets can have a
negative impact on the Company’s financial results. The
risk of changes in the realized value of the leased assets
compared to recorded residual values depends on many
factors outside of the Company’s control, including supply
and demand for the assets, condition of the assets at the
end of the lease term, and other economic factors.
Liquidity Risk
If the Company does not effectively manage its liquidity,
its business could suffer The Company’s liquidity is
essential for the operation of its businesses. Market
conditions, the threat or occurrence of a U.S. sovereign
default, unforeseen outflows of funds or other events could
negatively affect the Company’s level or cost of funding, in
turn affecting its ongoing ability to accommodate liability
maturities and deposit withdrawals, meet contractual
obligations, and fund asset growth and new business
transactions at a reasonable cost and in a timely manner. If
the Company’s access to stable and low-cost sources of
funding, such as customer deposits, is reduced, the
Company might need to use alternative funding, which
could be more expensive or of limited availability. Any
substantial, unexpected or prolonged changes in the level
or cost of liquidity could materially and adversely affect the
Company’s businesses.
In addition, bank failures in 2023 led to significant
volatility in the financial services industry and to liquidity
problems at certain institutions. Although governmental
support was provided in connection with these bank
failures, including the FDIC invoking the systemic risk
exception to guarantee uninsured deposits, there can be
no guarantee that the FDIC will invoke the systemic risk
exception in connection with any future bank failures or that
the government would otherwise take any action to provide
liquidity to troubled institutions. Further, even if
governmental support for financial institutions is available in
the future, it may not be sufficient to address systemic risks.
Loss of customer deposits could increase the
Company’s funding costs The Company relies on
customer deposits as a low-cost and stable source of
funding. The Company competes with banks and other
financial services companies for deposits, including those
that offer online channels. Recent declines in short-term
147
interest rates have generally lowered the Company’s
deposit funding costs. However, competition for deposits
could increase to the extent the Federal Reserve continues
the normalization of its balance sheet through quantitative
tightening. Increased competition could negatively impact
the Company’s ability to realize further improvement in
deposit funding costs, even if short-term rates continue to
decline. If short-term interest rates were to increase, the
Company would expect more intense competition in
deposit pricing. Competition and higher short-term interest
rates may cause the Company to increase the interest rates
it pays on deposits. If the Company’s competitors raise the
interest rates they pay on deposits, or lower the interest
rates they pay on deposits by less than the Company, the
Company’s funding costs may increase, either because the
Company raises the interest rates it pays on deposits to
avoid losing deposits to competitors or because the
Company loses deposits to competitors and must rely on
more expensive sources of funding. Higher funding costs
reduce the Company’s net interest margin and net interest
income.
Checking and savings account balances and other
forms of customer deposits may decrease when customers
perceive alternative investments, such as the stock market,
as providing a better risk/return tradeoff. When customers
move money out of bank deposits and into other
investments, the Company may lose a relatively low-cost
source of funds, increasing the Company’s funding costs
and reducing the Company’s net interest income. In
addition, mass withdrawals of deposits occurred at certain
banks that failed in 2023, seemingly triggered by losses in
the banks’ investment securities portfolios and concerns
about uninsured and uncollateralized deposits. A loss in the
value of the Company’s investment or loan portfolio,
perceived concerns regarding the Company’s and
USBNA’s capital positions or perceived concerns regarding
the level of USBNA’s uninsured and uncollateralized
deposits could cause rapid and significant deposit
outflows. This risk is exacerbated by technological
developments and changes in banking relationships, such
as customers maintaining accounts at multiple banks,
which increase the ease and speed with which depositors
are able to move their deposits. The potential speed of
deposit withdrawals may be further accelerated due to the
way information, including false information or unfounded
rumors, can be spread quickly through social media and
other online channels. If USBNA were to experience a
significant outflow of deposits, the Company may face
increased funding costs, suffer losses and have a reduced
ability to raise new capital.
The Company could lose access to sources of liquidity
if it were to experience financial or regulatory issues
The Company has access to sources of liquidity provided
by the Federal Reserve Bank, such as the Federal Reserve
Bank discount window and other liquidity facilities that the
Federal Reserve Board may establish from time to time, as
well as liquidity provided by the FHLB. To access these
sources of liquidity, the Federal Reserve Board or FHLB
may impose conditions that the Company and USBNA are
in sound financial condition (as determined by the Federal
Reserve Board or FHLB) or that the Company and USBNA
maintain minimum supervisory ratings. If the Company or
USBNA were to experience financial or regulatory issues, it
could affect the Company’s or USBNA's ability to access
liquidity facilities, including at times when the Company or
USBNA needs additional liquidity for the operation of its
business. If the Company or USBNA were to lose access
to these liquidity sources, it could have a material adverse
effect on the Company’s operations and financial condition.
The Company relies on dividends from its subsidiaries
for its liquidity needs, and the payment of those
dividends is limited by laws and regulations The
Company is a separate and distinct legal entity from
USBNA and the Company’s non-bank subsidiaries. The
Company receives a significant portion of its cash from
dividends paid by its subsidiaries. These dividends are the
principal source of funds to pay dividends on the
Company’s stock and interest and principal on its debt.
Various federal and state laws and regulations limit the
amount of dividends that USBNA and certain of the
Company’s non-bank subsidiaries may pay to the Company
without regulatory approval. Also, the Company’s right to
participate in a distribution of assets upon a subsidiary’s
liquidation or reorganization is subject to prior claims of the
subsidiary’s creditors, except to the extent that any of the
Company’s claims as a creditor of that subsidiary may be
recognized. Refer to “Supervision and Regulation” in the
Company’s Annual Report on Form 10-K for additional
information regarding limitations on the amount of
dividends USBNA may pay.
Competitive and Strategic Risk
The financial services industry is highly competitive,
and competitive pressures could intensify and
adversely affect the Company’s financial results The
Company operates in a highly competitive industry that
could become even more competitive as a result of
legislative, regulatory and technological changes, as well
as continued industry consolidation. This consolidation may
produce larger, better-capitalized and more geographically
diverse companies that are capable of offering a wider
array of financial products and services at more
competitive prices. The Company competes with other
commercial banks, savings and loan associations, mutual
savings banks, finance companies, mortgage banking
companies, credit unions, investment companies, credit
card companies, and a variety of other financial services
and advisory companies. Legislative or regulatory changes
also could lead to increased competition in the financial
services sector.
The adoption and rapid growth of new technologies,
including generative AI, cryptocurrencies and blockchain
and other distributed ledger technologies, have required
the Company to invest resources to adapt its systems,
products and services, and it expects to continue to make
similar investments. In addition, technology has lowered
barriers to entry and made it possible for non-banks to offer
products and services, such as loans and payment
services, that traditionally were banking products, and
made it possible for technology companies to compete with
148 U.S. Bancorp 2024 Annual Report
financial institutions in providing electronic, internet-based,
and mobile phone–based financial solutions. Competition
with non-banks, including technology companies, to
provide financial products and services is intensifying. In
particular, the activity of financial technology companies
(“fintechs”) has grown significantly over recent years and is
expected to continue to grow. Fintechs have and may
continue to offer bank or bank-like products. For example, a
number of fintechs have applied for bank or industrial loan
charters, which, in some cases, have been granted. In
addition, other fintechs have partnered with existing banks
to allow them to offer deposit products or payment services
to their customers. Many of these companies, including the
Company’s competitors, have fewer regulatory constraints,
and some have lower cost structures, in part due to lack of
physical structures. In addition, future regulatory
developments may increase the ability of fintechs and other
competitors to compete with traditional banks, including
through the use of cryptocurrency and other digital assets
or alternative payment systems. Also, the potential need to
adapt to industry changes in information technology
systems, including potential upgrades relating to digital
assets, on which the Company and financial services
industry are highly dependent, could present operational
issues and require capital spending. The Company’s ability
to compete successfully depends on a number of factors,
including, among others, its ability to develop and execute
strategic plans and initiatives; developing, maintaining and
building long-term customer relationships based on quality
service, competitive prices, high ethical standards and
safe, sound assets; and industry and general economic
trends. A failure to compete effectively could contribute to
downward price pressure on the Company’s products or
services or a loss of market share.
The Company may need to lower prices on existing
products and services and develop and introduce new
products and services to maintain market share The
Company’s success depends, in part, on its ability to adapt
its products and services to evolving customer preferences
and industry standards. There is increasing pressure to
provide products and services at lower prices. Lower
prices can reduce the Company’s net interest margin and
revenues from its fee-based products and services. In
addition, the adoption of new technologies or further
developments in current technologies require the Company
to make substantial expenditures to modify or adapt its
existing products and services. Also, these and other
capital investments in the Company’s businesses may not
produce expected growth in earnings anticipated at the
time of the expenditure. The Company might not be
successful in developing or introducing new products and
services, adapting to changing customer preferences and
spending and saving habits (which may be altered
significantly and with little warning), achieving market
acceptance of its products and services, or sufficiently
developing and maintaining loyal customer relationships.
The Company may not realize the full value of its
strategic plans and initiatives As the Company develops
its strategic initiatives, it reviews the internal and external
environment to inform any changes required, take
advantage of new opportunities and/or respond to
unexpected challenges. Initiatives include focusing on
customer growth with tailored products and experiences
that meet customer needs; executing disciplined strategies
to grow and maintain sufficient capital levels as part of
preserving the Company’s financial position and risk
appetite; and partnering with or acquiring and integrating
financial services businesses or assets. The Company’s
initiatives are impacted by internal factors, rapid pace of
change from an evolving competitive landscape, increased
cybersecurity threats, accelerated digitalization, and
emerging technologies. Execution of these initiatives is also
impacted by the Company’s response to external economic
conditions, global political and economic uncertainty, and
regulatory factors that are beyond its control. The
Company’s future growth and the value of its businesses
will depend, in part, on its ability to effectively implement its
business strategy. If the Company is not able to
successfully execute its business strategy, then the
Company’s competitive position, reputation, prospects for
growth, and results of operations may be adversely
affected.
The Company may not be able to complete future
acquisitions, and completed acquisitions may not
produce revenue enhancements or cost savings at
levels or within timeframes originally anticipated, may
result in unforeseen integration difficulties, and may
dilute existing shareholders’ interests The Company
regularly explores opportunities to acquire financial
services businesses or assets and may also consider
opportunities to acquire other banks or financial institutions.
The Company cannot predict the number, size or timing of
acquisitions it might pursue.
The Company must generally receive federal regulatory
approval before it can acquire a bank or bank holding
company. The Company’s ability to pursue or complete an
attractive acquisition could be negatively impacted by
regulatory delay or other regulatory issues. The Company
cannot be certain when or if, or on what terms and
conditions, any required regulatory approvals will be
granted. For example, the Company may be required to sell
branches as a condition to receiving regulatory approval for
bank acquisitions. In addition, in 2024 the OCC issued a
policy statement on bank mergers that may result in more
scrutiny being applied to mergers with a resulting institution
with $50 billion or more in total assets. The Company is
unable to predict at this time what effects the OCC’s policy
statement may have on mergers involving USBNA, but it
may result in extended timelines for merger approvals. If
the Company commits certain regulatory violations,
including those that result in a downgrade in certain of the
Company’s bank regulatory ratings, governmental
authorities could, as a consequence, preclude it from
pursuing future acquisitions for a period of time. In addition,
the Company’s ability to complete future acquisitions may
depend on factors outside its control, including changes in
the presidential administration or in one or both houses of
Congress and public sentiment regarding bank mergers.
Acquisition activity by large banking organizations, such as
149
the Company, continues to draw regulatory and policy
focus, and future changes could impact consideration of
and regulatory approval processes for certain acquisitions.
In addition, acquisitions by large banking organizations
such as the Company may receive negative coverage in
the media or negative attention by certain members of
Congress or other policymakers. If the Company were to
receive significant negative publicity in connection with a
proposed acquisition, it could damage the Company’s
reputation and impede the Company’s ability to complete
the acquisition.
There can be no assurance that acquisitions the
Company completes will have the anticipated positive
results, including results related to expected revenue
increases, cost savings, increases in geographic or
product presence, and/or other projected benefits. The
Company may incur substantial expenses related to
acquisitions and integration of acquired companies.
Successful integration of an acquired company has in the
past presented and may in the future present challenges
due to differences in systems, operations, policies and
procedures, management teams and corporate cultures
and may be more costly or difficult to complete than
anticipated or have unanticipated adverse results.
Integration efforts could divert management’s attention and
resources, which could adversely affect the Company’s
operations or results. Integration efforts could result in
higher than expected customer loss, deposit attrition, loss
of key employees, issues with systems and technology,
disruption of the Company’s businesses or the businesses
of the acquired company, or otherwise adversely affect the
Company’s ability to maintain relationships with customers
and employees or achieve the anticipated benefits of the
acquisition. Also, the negative effect of any divestitures
required by regulatory authorities in acquisitions or
business combinations may be greater than expected. In
addition, future acquisitions may also expose the Company
to increased legal or regulatory risks. Finally, future
acquisitions could be material to the Company, and it may
issue additional shares of stock to pay for those
acquisitions, which would dilute current shareholders’
ownership interests.
Accounting and Tax Risk
The Company’s reported financial results depend on
management’s selection of accounting methods and
certain assumptions and estimates, which, if incorrect,
could cause unexpected losses in the future The
Company’s accounting policies and methods are
fundamental to how the Company records and reports its
financial condition and results of operations. The
Company’s management must exercise judgment in
selecting and applying many of these accounting policies
and methods, so they comply with generally accepted
accounting principles and reflect management’s judgment
regarding the most appropriate manner to report the
Company’s financial condition and results of operations. In
some cases, management must select the accounting
policy or method to apply from two or more alternatives,
any of which might be reasonable under the
circumstances, yet might result in the Company’s reporting
materially different results than would have been reported
under a different alternative.
Certain accounting policies are critical to presenting the
Company’s financial condition and results of operations.
They require management to make difficult, subjective or
complex judgments about matters that are uncertain.
Materially different amounts could be reported under
different conditions or using different assumptions or
estimates. These critical accounting policies include the
allowance for credit losses, estimations of fair value, the
valuation of MSRs, and income taxes. Because of the
uncertainty of estimates involved in these matters, the
Company may be required to do one or more of the
following: significantly increase the allowance for credit
losses and/or sustain credit losses that are significantly
higher than the reserve provided, recognize significant
losses on the remeasurement of certain asset and liability
balances, or significantly increase its accrued taxes
liability. For more information, refer to “Critical Accounting
Policies” in this Annual Report. In addition, the FASB, SEC
and other regulatory agencies may issue new or amend
existing accounting and reporting standards or change
existing interpretations of those standards that could
materially affect the Company's financial statements.
The Company’s investments in certain tax-advantaged
projects may not generate returns as anticipated and
may have an adverse impact on the Company’s
financial results The Company invests in certain tax-
advantaged projects promoting affordable housing,
community development and renewable energy resources.
The Company’s investments in these projects are designed
to generate a return primarily through the realization of
federal and state income tax credits, and other tax benefits,
over specified time periods. The Company is subject to the
risk that previously recorded tax credits, which remain
subject to recapture by taxing authorities based on
compliance features required to be met at the project level,
will fail to meet certain government compliance
requirements and will not be able to be realized. The
possible inability to realize these tax credit and other tax
benefits can have a negative impact on the Company’s
financial results. The risk of not being able to realize the tax
credits and other tax benefits depends on many factors
outside of the Company’s control, including changes in the
applicable tax code and the ability of the projects to be
completed.
General Risk Factors
The Company’s framework for managing risks may not
be effective in mitigating risk and loss to the Company
The Company’s risk management framework seeks to
mitigate risk and loss. The Company has established
processes and procedures intended to identify, measure,
monitor, report, and analyze the types of risk to which it is
subject, including liquidity risk, credit risk, market risk,
interest rate risk, compliance risk, strategic risk, reputation
risk, and operational risk related to its employees, systems
and vendors, among others. However, as with any risk
management framework, there are inherent limitations to
150 U.S. Bancorp 2024 Annual Report
the Company’s risk management strategies as there may
exist, or develop in the future, risks that it has not
appropriately anticipated or identified. In addition, the
Company relies on quantitative models to measure certain
risks and to estimate certain financial values, and these
models could fail to predict future events or exposures
accurately. The Company must also develop and maintain
a culture of risk management among its employees, as well
as manage risks associated with third parties, and could
fail to do so effectively. If the Company’s risk management
framework proves ineffective, the Company could incur
litigation and negative regulatory consequences and suffer
unexpected losses that could affect its financial condition
or results of operations.
The Company’s business could suffer if it fails to attract
and retain skilled employees The Company’s success
depends, in large part, on its ability to attract and retain key
employees. Competition for the best people in most
activities the Company engages in can be intense.
The employment market has continued to evolve,
influenced by macroeconomic shifts, changes in social
norms post-pandemic and technology advancements.
Continued pressures on competitive compensation,
benefits and flexible work arrangements continue to be
focus areas.
Employees have also continued to shift their focus to
better work-life balance, improved advancement
opportunities and skill specific development, and many
businesses, including the Company, have had to adapt
quickly to the changing environment. The Company’s ability
to compete successfully for talent has been and may
continue to be affected by its ability to adapt quickly to
such shifts in employee focus, and there is no assurance
that these developments will not cause increased turnover
or impede the Company’s ability to retain and attract high
caliber employees.
A downgrade in the Company’s credit ratings could
have a material adverse effect on its liquidity, funding
costs and access to capital markets The Company’s
credit ratings, which are subject to credit agencies’
ongoing review of a number of factors, including factors not
within the Company’s control, are important to the
Company’s liquidity. A reduction in one or more of the
Company’s credit ratings could adversely affect its liquidity,
increase its funding costs or limit its access to the capital
markets. Further, a downgrade could decrease the number
of investors and counterparties willing or able, contractually
or otherwise, to do business with or lend to the Company,
thereby adversely affecting the Company’s competitive
position. There can be no assurance that the Company will
maintain its current ratings and outlooks or whether or when
any downgrades could occur.
151
Managing Committee
Andrew Cecere
Mr. Cecere, 64, is Chairman and Chief Executive Officer of
U.S. Bancorp. Mr. Cecere has served as Chief Executive
Officer since April 2017 and Chairman since April 2018. He
also served as President from January 2016 to May
2024. In April 2025, he will serve as Executive Chairman of
U.S. Bancorp’s Board of Directors, continuing to lead the
Board and supporting Gunjan Kedia as she assumes the
role of Chief Executive Officer.
Souheil S. Badran
Mr. Badran, 60, is Senior Executive Vice President and
Chief Operations Officer of U.S. Bancorp. Mr. Badran has
served in this position since joining U.S. Bancorp in
December 2022. From January 2019 until November 2022,
he served as Executive Vice President and Chief Operating
Officer at Northwestern Mutual, having also served as Chief
Innovation Officer from January 2019 until September 2019.
Elcio R.T. Barcelos
Mr. Barcelos, 54, is Senior Executive Vice President and
Chief Human Resources Officer of U.S. Bancorp. Mr.
Barcelos has served in this position since joining U.S.
Bancorp in September 2020. Prior to joining U.S. Bancorp,
he served in a leadership role at Federal National Mortgage
Association (Fannie Mae).
James L. Chosy
Mr. Chosy, 61, is Senior Executive Vice President and
General Counsel of U.S. Bancorp. Mr. Chosy has served in
this position since March 2013. He also served as
Corporate Secretary of U.S. Bancorp from June 2022 until
December 2023 and from March 2013 until April 2016.
Gregory G. Cunningham
Mr. Cunningham, 61, is Senior Executive Vice President
and Chief Diversity Officer of U.S. Bancorp. Mr.
Cunningham has served in this position since July 2020.
From July 2019 until July 2020, he served as Senior Vice
President and Chief Diversity Officer of U.S. Bancorp,
having served as Vice President of Customer Engagement
of U.S. Bancorp from October 2015, when he joined U.S.
Bancorp, until July 2019.
Venkatachari Dilip
Mr. Dilip, 65, is Senior Executive Vice President and Chief
Information and Technology Officer of U.S. Bancorp. Mr.
Dilip previously was an Executive Vice President from
September 2018 to April 2023 and has served as Chief
Information and Technology Officer since September 2018,
when he joined U.S. Bancorp.
Terrance R. Dolan
Mr. Dolan, 63, is Vice Chair and Chief Administration Officer
of U.S. Bancorp. Mr. Dolan has served in this position since
September 2023. From August 2016 to August 2023, he
served as Vice Chair and Chief Financial Officer of U.S.
Bancorp.
Revathi N. Dominski
Ms. Dominski, 54, is Senior Executive Vice President and
Chief Social Responsibility Officer of U.S. Bancorp and
President of the U.S. Bank Foundation. Ms. Dominski has
served as Senior Executive Vice President and Chief Social
Responsibility Officer since April 2023. She joined U.S.
Bancorp in June 2015 as President of the U.S. Bank
Foundation and Senior Vice President of Corporate Social
Responsibility.
Sekou Kaalund
Mr. Kaalund, 49, is Senior Executive Vice President, Head
of Branch and Small Business Banking of U.S. Bancorp. Mr
Kaalund previously was Executive Vice President from
December 2022 to January 2025 and has served as Head
of Branch and Small Business Banking since joining U.S.
Bancorp in December 2022. Prior to joining U.S. Bancorp,
he served as the Head of Consumer Banking for the
Northeast Division at JPMorgan Chase from September
2020 to December 2022. He served as Managing Director
and Head of Advancing Black Pathways at JPMorgan
Chase from August 2018 to September 2020 and was a
Managing Director across several areas in the Corporate
Investment Bank at JPMorgan Chase, including U.S. Public
and Corporate Pensions and Global Private Equity and Real
Estate Fund Services, from July 2007 to September 2020.
Gunjan Kedia
Ms. Kedia, 54, is President of U.S. Bancorp and a member
of U.S. Bancorp’s Board of Directors. Ms. Kedia has served
as President since May 2024. From June 2023 to May 2024,
she served as Vice Chair, Wealth, Corporate, Commercial
and Institutional Banking, of U.S. Bancorp. From December
2016 to June 2023, she served as Vice Chair, Wealth
Management and Investment Services, of U.S. Bancorp. In
April 2025, she will assume the additional role of Chief
Executive Officer.
Courtney Kelso
Ms. Kelso, 47, is Senior Executive Vice President, Head of
Payments: Consumer and Small Business of U.S. Bancorp.
Ms. Kelso has served in this position since joining U.S.
Bancorp in February 2025. Prior to joining U.S. Bancorp,
she served as Executive Vice President and Head of Card
Products, Global Commercial Services at American
Express from February 2021 to February 2024. From
February 2018 to February 2021, she served as Senior Vice
President of US Small Business, Co-Brand and Corporate
Cards, Global Commercial Services at American Express.
152 U.S. Bancorp 2024 Annual Report
Felicia La Forgia
Ms. La Forgia, 56, is Senior Executive Vice President, Head
of the Institutional Client Group (ICG) of U.S. Bancorp. Ms.
La Forgia previously was Executive Vice President from
July 2016 to January 2025 and has served as Head of ICG
since June 2024. From June 2020 to June 2024, she served
as Head of Corporate Banking of U.S. Bancorp.
Stephen L. Philipson
Mr. Philipson, 46, is Senior Executive Vice President, Head
of Wealth, Corporate, Commercial and Institutional Banking
(WCIB). Mr. Philipson has served as Head of WCIB since
June 2024 and Senior Executive Vice President since April
2023. From April 2023 to June 2024, he served as Head of
Global Markets and Specialized Finance of U.S. Bancorp.
From October 2017 to April 2023, he served as Head of
Fixed Income and Capital Markets of U.S. Bancorp.
Jodi L. Richard
Ms. Richard, 56, is Vice Chair and Chief Risk Officer of U.S.
Bancorp. Ms. Richard has served in this position since
October 2018. She served as Executive Vice President and
Chief Operational Risk Officer of U.S. Bancorp from
January 2018 until October 2018.
Arijit Roy
Mr. Roy, 48, is Senior Executive Vice President, Head of
Consumer and Business Banking Products of U.S.
Bancorp. Mr. Roy previously was an Executive Vice
President from August 2023 to October 2024 and has
served as Head of Consumer and Business Banking
Products since July 2024. Prior to July 2024, he served as
Head of Consumer and Segment Solutions since joining
U.S. Bancorp in July 2022. Prior to joining U.S. Bancorp, he
held various leadership positions at Truist, including
Executive Vice President and Head of Consumer Products
from April 2022 to July 2022, Executive Vice President of
Deposits, Small Business Banking, Strategy and Analytics
from July 2021 to April 2022, and Senior Vice President of
Strategy, Digital Integration and Transformation from
September 2019 to July 2021.
Mark G. Runkel
Mr. Runkel, 48, is Senior Executive Vice President, Head of
Payments: Merchant and Institutional. Mr. Runkel has
served in this position since January 2025. From August
2021 to January 2025, he served as Chief Transformation
Officer of U.S. Bancorp. From December 2013 to August
2021, he served as Senior Executive Vice President and
Chief Credit Officer of U.S. Bancorp.
John C. Stern
Mr. Stern, 46, is Senior Executive Vice President and Chief
Financial Officer of U.S. Bancorp. Mr. Stern has served as
Senior Executive Vice President since April 2023 and Chief
Financial Officer since September 2023. He also served as
Head of Finance of U.S. Bancorp from May 2023 to August
2023. He served as Executive Vice President of U.S.
Bancorp from July 2013 through April 2023. From May 2021
until May 2023, he served as President of the Global
Corporate Trust and Custody business of U.S. Bancorp.
Previously, he served as Treasurer of U.S. Bancorp from
July 2013 to May 2021.
Dominic V. Venturo
Mr. Venturo, 58, is Senior Executive Vice President and
Chief Digital Officer of U.S. Bancorp. Mr. Venturo has
served in this position since July 2020. From January 2015
until July 2020, he served as Executive Vice President and
Chief Innovation Officer of U.S. Bancorp.
153
Directors
Andrew Cecere1,6
Chairman and Chief Executive Officer
U.S. Bancorp
Warner L. Baxter1,2,3
Retired Executive Chairman and Former Chairman,
President and Chief Executive Officer
Ameren Corporation
(Energy)
Dorothy Bridges1,5,6
Chief Executive Officer
Metropolitan Economic Development Association (Meda)
(Economic Development)
Elizabeth L. Buse2,6
Former Chief Executive Officer
Monitise plc
(Financial services)
Alan B. Colberg2,5
Retired President and Chief Executive Officer
Assurant, Inc.
(Financial services and specialty insurance)
Kimberly N. Ellison-Taylor2,5
Founder and Chief Executive Officer
KET Solutions, LLC
(Technology)
Aleem Gillani2,6
Retired Corporate Executive Vice President and
Chief Financial Officer
SunTrust Banks, Inc.
(Financial services)
Kimberly J. Harris1,3,4
Retired President and Chief Executive Officer
Puget Energy, Inc.
(Energy)
1. Executive Committee
2. Audit Committee
3. Compensation and Human Resources Committee
4. Governance Committee
5. Public Responsibility Committee
6. Risk Management Committee
Roland A. Hernandez1,3,4
Founding Principal and Chief Executive Officer
Hernandez Media Ventures
(Media)
Gunjan Kedia1
President
U.S. Bancorp
Richard P. McKenney4,6
President and Chief Executive Officer
Unum Group
(Financial protection benefits)
Yusuf I. Mehdi5,6
Executive Vice President,
Consumer Chief Marketing Officer
Microsoft Corporation
(Technology)
Loretta E. Reynolds5,6
Founder and Chief Executive Officer
LEReynolds Group, LLC
(Information Technology)
John P. Wiehoff1,6
Retired Chairman and Chief Executive Officer
C.H. Robinson Worldwide, Inc.
(Transportation and logistics services)
Scott W. Wine1,3,4
Former Chief Executive Officer
CNH Industrial N.V.
(Agricultural machinery)
154 U.S. Bancorp 2024 Annual Report
C O R P O R A T E I N F O R M A T I O N
©2025 U.S. Bancorp
Executive offices
U.S. Bancorp
800 Nicollet Mall
Minneapolis, MN 55402
Common stock transfer
agent and registrar
Computershare acts as our transfer agent
and registrar, dividend paying agent and
dividend reinvestment plan administrator
and maintains all shareholder records
for the Company. Inquiries related to
shareholder records, stock transfers,
changes of ownership, lost stock
certificates, changes of address
and dividend payment should be
directed to the transfer agent at:
Computershare
P.O. Box 505000
Louisville, KY 40233
Phone: 888-778-1311 or
201-680-6578 (international calls)
computershare.com/investor
Registered or Certified Mail:
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
Telephone representatives are available
weekdays from 8 a.m. to 6 p.m., Central
Time, and automated support is available
24 hours a day, seven days a week.
Specific information about your account
is available on Computershare’s
Investor Center website.
Independent auditor
Ernst & Young LLP serves as the
independent auditor for U.S. Bancorp.
Common stock
listing and trading
U.S. Bancorp common stock is listed and
traded on the New York Stock Exchange
under the ticker symbol USB.
Dividends and
reinvestment plan
U.S. Bancorp currently pays quarterly
dividends on our common stock on or
about the 15th day of January, April,
July and October, subject to approval
by our Board of Directors. U.S. Bancorp
shareholders can choose to participate
in a plan that provides automatic
reinvestment of dividends and/or
optional cash purchase of additional
shares of U.S. Bancorp common stock.
For more information, please contact
our transfer agent, Computershare.
Investor relations contact
George Andersen
Senior Vice President,
Director of Investor Relations
george.andersen@usbank.com
Phone: 612-303-3620
Financial information
U.S. Bancorp news and financial results are
available through our website and by mail.
Website: For information about
U.S. Bancorp, including news, financial
results, annual reports and other
documents filed with the Securities
and Exchange Commission, visit
usbank.com and click on About
Us and then Investor Relations.
Mail: At your request, we will mail to you
our quarterly earnings, news releases,
quarterly financial data reported on Form
10-Q, Form 10-K and additional copies
of our annual reports. Please contact:
U.S. Bancorp Investor Relations
800 Nicollet Mall
Minneapolis, MN 55402
investorrelations@usbank.com
Phone: 866-775-9668
Media requests
David R. Palombi
Executive Vice President
Chief Communications Officer
Public Affairs and Communications
david.palombi@usbank.com
Phone: 612-303-3167
Privacy
U.S. Bancorp is committed to
respecting the privacy of our customers
and safeguarding the financial and
personal information provided to us.
To learn more about the U.S. Bancorp
commitment to protecting privacy, visit
usbank.com and click on Privacy.
Accessibility
U.S. Bancorp is committed to providing
ready access to our products and services
so all of our customers, including people
with disabilities, can succeed financially.
To learn more, visit usbank.com and click
on Accessibility.
Ethics
At U.S. Bancorp, our commitment to high
ethical standards guides everything we do.
Demonstrating this commitment through
our words and actions is how each of us
does the right thing every day for our
customers, shareholders, communities and
each other. Our ethical culture has been
recognized by the Ethisphere® Institute,
which named us to its World’s Most Ethical
Companies® list for the 10th time in 2024.
Each year, every employee certifies
compliance with the letter and spirit of our
Code of Ethics and Business Conduct.
For details about our Code of Ethics and
Business Conduct, visit usbank.com/
about-us-bank/ethics and click on
Code of Ethics and Business Conduct.
At U.S. Bancorp, we are committed to
a culture that fosters innovation and helps
us deepen our relationships with our
stakeholders: our employees, customers,
shareholders and communities.
Our employees bring their whole selves to
work. We respect and value each other’s
differences, strengths and perspectives,
and we embrace the communities we serve.
This makes us stronger, more innovative
and more responsive to our clients’ needs.
To learn more visit
usbank.com/about-us-bank.
Equal opportunity
U.S. Bancorp and our subsidiaries are
committed to providing Equal Employment
Opportunity to all employees and applicants
for employment. In keeping with this
commitment, employment decisions are
made based on abilities, not race, color,
religion, creed, citizenship, national
origin or ancestry, gender, age, disability,
veteran status, sexual orientation, marital
status, gender identity or expression,
genetic information or any other factors
protected by law. The Company complies
with municipal, state and federal fair
employment laws, including regulations
applying to federal contractors.
U.S. Bancorp, including each of our
subsidiaries, is an equal opportunity
employer committed to creating a
diverse workforce.
800 Nicollet Mall
Minneapolis, MN 55402
800-USBANKS (872-2657)
usbank.com