Company: USB-PA
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0000036104-25-000064
Chunk: 166

Company: US BANCORP \DE\
Filing Date: 2025-11-05
Form: 10-Q
Chunk 166
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.8 billion of PCD loans, primarily related to the MUB acquisition, included in its loan portfolio at September 30, 2025.

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.

| U.S. Bancorp |     | 17 |

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.

The allowance for credit losses was $7.9 billion at both September 30, 2025 and December 31, 2024. The $28 million (0.4 percent) decrease in the allowance for credit losses at September 30, 2025, compared with December 31, 2024, was primarily driven by the impact of loan 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, the government shutdown 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 reflected an allowance to loan coverage ratio of approximately 10 percent at September 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 2.06 percent at September 30, 2025, compared

with 2.09 percent at December 31, 2024. The ratio of the allowance for credit losses to nonperforming loans was 490 percent