Company: USB-PA
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000036104-25-000055
Chunk: 27

Company: US BANCORP \DE\
Filing Date: 2025-08-07
Form: 10-Q
Item: Item 7
Chunk 27
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31, 2024, was primarily driven by the impact of loan portfolio sales during the second quarter of 2025, along with improved credit quality and portfolio mix. The Company continued to monitor economic uncertainty related to interest rates, inflationary pressures, including those related to changing tariff policies, and other economic factors that may affect the financial strength of corporate and consumer borrowers. The Company also continued to monitor the commercial real estate office portfolio and maintained an allowance to loan coverage ratio of approximately 11 percent at June 30, 2025. In addition to these broad economic factors, the Company considered various factors for determining its expected loss estimates, including customer specific information impacting changes in risk ratings, projected delinquencies and the impact of economic deterioration on selected borrowers’ liquidity and ability to repay.The ratio of the allowance for credit losses to period-end loans was 2.07 percent at June 30, 2025, compared with 2.09 percent at December 31, 2024. The ratio of the allowance for credit losses to nonperforming loans was 480 percent at June 30, 2025, compared with 442 percent at December 31, 2024. The ratio of the allowance for credit losses to annualized loan net charge-offs was 354 percent at June 30, 2025, compared with 368 percent of full year 2024 net charge-offs at December 31, 2024.The allowance for credit losses related to commercial lending segment loans decreased $60 million during the first six months of 2025, reflecting improved credit quality and portfolio mix, partially offset by commercial loan growth and increased economic uncertainty. The allowance for credit losses related to consumer lending segment loans decreased $3 million during the first six months of 2025, driven by the impact of loan portfolio sales during the second quarter of 2025, partially offset by the impacts of economic uncertainty. Economic conditions considered in estimating the allowance for credit losses at June 30, 2025 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 considered in the estimate ranged from 3.5 percent to 9.3 percent, with a peak weighted average unemployment rate of 6.0 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 June 30, 2025