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Brief Overview on Company’s Performance: U.S. Bancorp (NYSE: USB)

MINNEAPOLIS, July 26, 2019 – Shares of U.S. Bancorp (NYSE: USB) showed the bullish trend with a higher momentum of 1.32% to $57.31. The company traded total volume of 3.538M shares as contrast to its average volume of 5.21M shares. The company has a market value of $90.36B and about 1.60B shares outstanding.

U.S. Bancorp (NYSE: USB) reported net income of $1,699.0M and diluted earnings per common share of $1.00.

NET INTEREST INCOME:

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Net interest income on a taxable-equivalent basis in the first quarter of 2019 was $3,286.0M, a boost of $89.0M (2.8 percent) over the first quarter of 2018. The increase was principally driven by the impact of rising interest rates, earning assets growth, and higher yields on securities, partially offset by deposit pricing and funding mix shift. Average earning assets were $7.60B (1.9 percent) higher than the first quarter of 2018, reflecting increases of $6.70B (2.4 percent) in average total loans, $686.0M (0.6 percent) in average investment securities, and $1.20B (7.8 percent) in average other earning assets. Excluding the impact of the second quarter of 2018 sale of the Company’s federally guaranteed student loan portfolio and the fourth quarter of 2018 sale of the majority of the Company’s FDIC covered loans; average total loans grew 3.7 percent contrast with the first quarter of 2018.

Average investment securities in the first quarter of 2019 increased $686.0M (0.6 percent) over the first quarter of 2018 and $41.0M over the fourth quarter of 2018 because of purchases of mortgage-backed and state and political securities, net of prepayments and maturities.

AVERAGE LOANS:

Average total loans were $6.70B (2.4 percent) higher than the first quarter of 2018. Excluding the impact of the second quarter of 2018 sale of the Company’s federally guaranteed student loan portfolio and the fourth quarter of 2018 sale of the majority of the Company’s FDIC covered loans; average total loans grew 3.7 percent over the prior year quarter. The increase was because of growth in residential mortgages (9.0 percent), total commercial loans (4.6 percent), credit card loans (6.2 percent), and retail leasing (7.6 percent). These increases were partially offset by decreases in covered loans because of the fourth quarter of 2018 sale, total commercial real estate loans (2.2 percent) because of customers paying down balances and other loans (2.9 percent) which were influenced by the sale of student loans.

Average total loans were $2.40B (0.9 percent) higher than the fourth quarter of 2018 driven by growth in residential mortgages (1.7 percent) and total commercial loans (1.4 percent), partially offset by a decrease in total commercial real estate loans (1.7 percent).

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AVERAGE DEPOSITS:

Average total deposits for the first quarter of 2019 were $786.0M (0.2 percent) higher than the first quarter of 2018. Average noninterest-bearing deposits reduced $6.00B (7.6 percent) year-over-year mainly because of the continued deployment by customers of business deposits within Corporate and Commercial Banking and corporate trust balances within Wealth Management and Investment Services. Average total savings deposits were $1.30B (0.6 percent) lower year-over-year driven by decreases in corporate trust balances within Wealth Management and Investment Services together with the run-off related to the business merger of a large financial customer, partially offset by increases in Consumer and Business Banking. Average time deposits were $8.10B (22.0 percent) higher than the prior year quarter. Changes in time deposits are mostly related to those deposits managed as an alternative to other funding sources such as wholesale borrowing, based mostly on relative pricing and liquidity characteristics.

Average total deposits increased $1.00B (0.3 percent) from the fourth quarter of 2018. On a linked quarter basis, average noninterest-bearing deposits reduced $3.70B (4.8 percent) reflecting decreases in Corporate and Commercial Banking and Consumer and Business Banking. Average total savings deposits increased $1.70B (0.8 percent) on a linked quarter basis mainly because of increases in Consumer and Business Banking and Corporate and Commercial Banking. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, increased $3.10B (7.3 percent) on a linked quarter basis.

NONINTEREST INCOME:

First quarter noninterest income of $2,291.0M was $19.0M (0.8 percent) higher than the first quarter of 2018 driven by growth in corporate payment products revenue and merchant processing services reflecting higher sales volumes. Other noninterest income also increased year-over-year mainly because of higher equity investment income, tax-advantaged investment syndication revenue, and transition services agreement revenue associated with the ATM processing business sale in 2018. These increases were partially offset by lower credit and debit card revenue, lower deposit service charges, and lower mortgage banking revenue. Credit and debit card revenue reduced $20.0M (6.2 percent) reflecting fewer billing cycle processing days in the first quarter of 2019, a change in the accounting for prepaid card revenue in the first quarter of 2018, and industry trends in post-holiday consumer spending. Deposit service charges reduced $44.0M (16.9 percent) driven by the sale of the Company’s ATM third-party servicing business in 2018. The decrease in mortgage banking revenue of $15.0M (8.2 percent) was because of changes in mortgage servicing rights valuations, net of hedging activities, and lower servicing income, partially offset by higher production volume.

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Noninterest income was $207.0M (8.3 percent) lower in the first quarter of 2019 contrast with the fourth quarter of 2018 reflecting lower payment services revenue, deposit service charges, and other noninterest income. Payment services revenue reduced $90.0M (9.6 percent) mainly because of seasonally lower sales across all payment business segments and fewer billing cycle processing days within the credit and debit card business segment. Deposit service charges reduced $36.0M (14.2 percent) mainly because of the sale of the Company’s ATM third-party servicing business and the seasonal impact of two fewer days in the first quarter of 2019. Other noninterest income reduced $63.0M (20.3 percent) on a linked quarter basis mainly because of the notable items in the fourth quarter of 2018. Excluding the notable items, other noninterest income increased 5.6 percent on a linked quarter basis.

NONINTEREST EXPENSE:

First quarter noninterest expense of $3,087.0M was $32.0M (1.0 percent) higher than the first quarter of 2018 mainly because of higher personnel costs and technology investment, partially offset by lower other noninterest expense. Compensation expense increased $36.0M (2.4 percent) principally because of the impact of hiring to support business growth and merit increases. Other noninterest expense reduced $38.0M (9.4 percent) because of lower FDIC assessment costs, driven by the elimination of the surcharge in the fourth quarter of 2018, and lower costs related to tax-advantaged projects, partially offset by other expenses.

Noninterest expense reduced $193.0M (5.9 percent) on a linked quarter basis. The fourth quarter of 2018 included notable items related to severance charges and legal accruals recorded in noninterest expense. Excluding the impact of the fourth quarter of 2018 notable items noninterest expense reduced $19.0M (0.6 percent) because of seasonally lower costs related to tax-advantaged projects and professional services, together with lower marketing and business development expense driven by the timing of certain marketing campaigns. Partially offsetting these decreases were increases in employee benefits expense of $25.0M (8.1 percent) because of seasonally higher payroll taxes.

The Company offered net profit margin of 40.60%. ROE was recorded as 15.10% while beta factor was 1.07. The stock, as of recent close, has shown the weekly downbeat performance of -0.56% which was maintained at 16.06% in this year.