US BANCORP DE

Line of Business Financial Review

The Company’s major lines of business are Wealth, Corporate, Commercial and Institutional Banking, Consumer and Business Banking, Payment Services, and Treasury and Corporate Support.

Basis for Financial Presentation Business line results are derived from the Company’s business unit profitability reporting systems by specifically attributing managed balance sheet assets, deposits and other liabilities and their related income or expense. Refer to Note 16 of the Notes to Consolidated Financial Statements for further information on the business lines’ 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 line of business 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 lines of businesses to create the Wealth, Corporate, Commercial and Institutional Banking line of business during the third quarter of 2023. Prior period results were restated 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, government and institutional clients. Wealth, Corporate, Commercial and Institutional Banking contributed $1.2 billion of the Company’s net income in the second quarter and $2.3 billion in the first six months of 2024, or an increase of $105 million (9.8 percent) and a decrease of $5 million (0.2 percent), respectively, compared with the same periods of 2023.

Net revenue increased $72 million (2.4 percent) in the second quarter and $107 million (1.8 percent) in the first six months of 2024, compared with the same periods of 2023. Net interest income, on a taxable-equivalent basis, increased $12 million (0.6 percent) in the second quarter of 2024, compared with the second quarter of 2023, primarily due to growth in interest-bearing deposits, partially offset by lower non-interest bearing deposits. Net interest income, on a taxable-equivalent basis, decreased $47 million (1.2 percent) in the first six months of 2024, compared with the first six months of 2023, primarily due to the impact of deposit mix and pricing. Noninterest income increased $60 million (5.6 percent) in the second quarter and $154 million (7.4 percent) in the first six months of 2024, compared with the same periods of 2023, primarily due to higher trust and investment management fees and investment products fees, both driven by business growth and favorable market conditions.

Noninterest expense decreased $6 million (0.4 percent) in the second quarter of 2024, compared with the second quarter of 2023, primarily due to synergies from the MUB acquisition, partially offset by higher compensation and employee benefits expense. Noninterest expense increased $8 million (0.3 percent) in the first six months of 2024, compared with the first six months of 2023, primarily due to higher compensation and employee benefits expense. The provision for credit losses decreased $62 million (38.3 percent) in the second quarter of 2024, compared with the second quarter of 2023, primarily due to stabilizing credit quality. The provision for credit losses increased $106 million (78.5 percent) in the first six months of 2024, compared with the first six months of 2023, primarily due to select commercial credit downgrades and charge-offs in the first six months of 2024.

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, ATM processing, mobile devices, distributed mortgage loan officers, and intermediary relationships including auto dealerships, mortgage banks, and

strategic business partners. Consumer and Business Banking contributed $512 million of the Company’s net income in the second quarter and $996 million in the first six months of 2024, or decreases of $197 million (27.8 percent) and $500 million (33.4 percent), respectively, compared with the same periods of 2023.

Net revenue decreased $391 million (14.3 percent) in the second quarter and $878 million (15.9 percent) in the first six months of 2024, compared with the same periods of 2023. Net interest income, on a taxable-equivalent basis, decreased $373 million (16.3 percent) in the second quarter and $883 million (18.9 percent) in the first six months of 2024, compared with the same periods of 2023, due to the impact of deposit mix and pricing, as well as lower loan balances. Noninterest income decreased $18 million (4.2 percent) in the second quarter of 2024, compared with the second quarter of 2023, primarily due to lower service charges. Noninterest income increased $5 million (0.6 percent) in the first six months of 2024, compared with the first six months of 2023, primarily due to higher mortgage banking revenue driven by higher gain on sale margins, partially offset by a decrease in service charges.

Noninterest expense decreased $142 million (8.0 percent) in the second quarter and $272 million (7.8 percent) in the first six months of 2024, compared with the same periods of 2023, primarily due to synergies from the MUB acquisition. The provision for credit losses increased $14 million (87.5 percent) in the second quarter and $61 million in the first six months of 2024, compared with the same periods of 2023, due to credit deterioration and stabilization in balances. Economic conditions and delinquencies have subsequently stabilized.

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 $297 million of the Company’s net income in the second quarter and $540 million in the first six months of 2024, or decreases of $16 million (5.1 percent) and $85 million (13.6 percent), respectively, compared with the same periods of 2023.

Net revenue increased $94 million (5.6 percent) in the second quarter and $191 million (5.9 percent) in the first six months of 2024, compared with the same periods of 2023. Net interest income, on a taxable-equivalent basis, increased $50 million (8.0 percent) in the second quarter and $105 million (8.3 percent) in the first six months of 2024, compared with the same periods of 2023, primarily due to higher loan yields driven by higher interest rates and customer revolve rates, along with higher loan balances, partially offset by higher funding costs. Noninterest income increased $44 million (4.2 percent) in the second quarter and $86 million (4.3 percent) in the first six months of 2024, compared with the same periods of 2023, driven by higher merchant processing services revenue due to favorable rates, along with increased card revenue due to higher spend volume.

Noninterest expense increased $42 million (4.5 percent) in the second quarter and $92 million (4.9 percent) in the first six months of 2024, compared with the same periods of 2023, reflecting higher net shared services expense driven by investment in infrastructure, along with higher marketing and business development expense. The provision for credit losses increased $74 million (23.6 percent) in the second quarter and $213 million (39.9 percent) in the first six months

of 2024, compared with the same periods of 2023, primarily due to a combination of loan growth and credit deterioration. Economic conditions and delinquencies have subsequently stabilized.

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 net losses of $378 million in the second quarter and $914 million in the first six months of 2024, compared with net losses of $728 million and $1.4 billion, respectively, in the same periods of 2023.

Net revenue decreased $83 million (43.9 percent) in the second quarter and $188 million (50.9 percent) in the first six months of 2024, compared with the same periods of 2023. Net interest income, on a taxable-equivalent basis, decreased $86 million (23.7 percent) in the second quarter and $225 million (32.4 percent) in the first six months of 2024, compared with the same periods of 2023, primarily due to higher funding costs, partially offset by higher yields on the investment securities portfolio and cash balances. Noninterest income increased $3 million (1.7 percent) in the second quarter and $37 million (11.4 percent) in the first six months of 2024, compared with the same periods of 2023, primarily due to an increase in commercial products revenue and a gain on the sale of mortgage servicing rights during the second quarter of 2024, partially offset by a decrease in other revenue. The increase in noninterest income in the second quarter of 2024, compared with the second quarter of 2023, was further offset by losses on the sale of investment securities in the second quarter of 2024.

Noninterest expense decreased $249 million (51.4 percent) in the second quarter and $279 million (27.9 percent) in the first six months of 2024, compared with the same periods of 2023, primarily due to synergies from the MUB acquisition and lower merger and integration charges, as well as prudent expense management and continued focus on operational efficiency, partially offset by the impact of the FDIC special assessment in the current year, higher net shared services expense and higher marketing and business development expense due to the timing of campaigns. The provision for credit losses decreased $279 million (84.8 percent) in the second quarter and $507 million (91.2 percent) in the first six months of 2024, compared with the same periods of 2023, primarily due to balance sheet repositioning and capital management actions in the prior year, along with relative stability in the economic outlook in the current year.

Income taxes are assessed to each line of business at a managerial tax rate of 25.0 percent with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Treasury and Corporate Support.

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 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.

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.

The following tables show the Company’s calculation of these non-GAAP financial measures:

(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.

(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.

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. Management has discussed the development and the selection of critical accounting policies with the Company’s Audit Committee. Those policies considered to be critical accounting policies relate to the allowance for credit losses, fair value estimates, MSRs, and income taxes. These accounting policies are discussed in detail in “Management’s Discussion and Analysis — Critical Accounting Policies” and the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.