Articles · Lenders and fintech
Reported article
How Much Did U.S. Bank Make From Pandemic Relief?
The SBA owed U.S. Bank about $507 million in processing fees on the 174,822 PPP loans it made, on a loan-by-loan model. U.S. Bancorp never published a fee total. Its results slides later put its "PPP income," fees and interest together, at $412 million for January 2021 through September 2022. No U.S. Bancorp filing we read pledges any of it away.
I. $506.9 million, modeled
With no fee total from the bank, the answer has to be modeled, as it was for Womply's fees: each loan in the SBA's file, priced under the fee rule in force on the day it was approved.
| Question | Figure | Source | Kind |
|---|---|---|---|
| What did the SBA owe U.S. Bank on its 2020 loans? | $284.9 million on 108,030 loans | SBA loan-level data, priced loan by loan | modeled |
| On its 2021 loans? | $222.0 million on 66,792 loans | same | modeled |
| What did U.S. Bancorp report as PPP fees? | no total; the fees sit inside net interest income as "loan fees" | Forms 10-Q and 10-K, 2020 through 2022 | company filing |
| What did it report as PPP income? | $412 million, fees and 1 percent interest together, first quarter of 2021 through third quarter of 2022 | results presentations, April 14 and October 14, 2022 | company filing |
| Did it pledge the fees away? | no pledge in any filing we read | Forms 10-Q, 10-K, 8-K and proxy statements, 2020 through 2022 | company filing |
The two model halves add to $506.9 million, the 14th-largest fee total among the 4,688 lenders in the SBA file (PPP lenders by estimated fees). The series ranking of fee collectors adds agents and contractors and ranks each on its fees after payments to agents. Several lenders with bigger modeled fee totals fall below U.S. Bank there, once their payments to agents such as Womply and Blueacorn are subtracted or their own published net figures are used. U.S. Bank is ninth. Ahead of it are Womply, ranked on its billings of $1.8 billion to $2.6 billion and covered in its own piece, then JPMorgan Chase, Bank of America, Blueacorn, Cross River Bank, Wells Fargo, PNC and Truist. TD Bank is tenth, at $497.9 million, $9 million behind.
The $506.9 million is fees owed, before the cost of the people and systems that processed the loans. No U.S. Bancorp filing we read gives that cost.
The model's loan counts can be checked against the bank's. U.S. Bancorp said on July 15, 2020 that it had "loaned $7.3 billion to over 101,000 customers." The SBA file shows 100,563 U.S. Bank loans approved by June 30, 2020, for $7.37 billion. Its chief executive, Andy Cecere, wrote in the 2021 proxy statement that the bank had "helped more than 108,000 small businesses obtain Paycheck Protection Program loans." The file has 108,030 U.S. Bank loans approved in 2020.
II. Who paid U.S. Bank, and for what
The SBA paid the lender of record a processing fee on every PPP loan and guaranteed the loan in full. On 2020 loans the fee was 5 percent up to $350,000, 3 percent up to $2 million and 1 percent above that (85 FR 20811). On 2021 loans of $50,000 or less it became the lesser of 50 percent of the loan or $2,500 (86 FR 3692; 86 FR 3712).
Say a dental practice borrowed $60,000 from U.S. Bank in May 2020, close to the bank's average loan. The SBA paid the bank $3,000. A $20,000 loan to a sole proprietor in March 2021 paid the bank $2,500, or 12.5 percent.
U.S. Bank's book looked like the program's. Its loans averaged $61,863 (lender page). Of its loans, 76.3 percent were for $50,000 or less; across all lenders the figure was 78.3 percent. JPMorgan Chase's was 66.3 percent and PNC's 59.0 percent. The split by size:
| U.S. Bank loans by size | Loans | Share of loans | Modeled fees | Share of fees |
|---|---|---|---|---|
| $50,000 or less | 133,347 | 76.3% | $197.0M | 38.9% |
| $50,000 to $350,000 | 37,146 | 21.2% | $211.3M | 41.7% |
| $350,000 to $2 million | 3,915 | 2.2% | $81.5M | 16.1% |
| $2 million and up | 414 | 0.2% | $17.2M | 3.4% |
That mix came to 4.7 cents in modeled fees per dollar lent, against 4.8 cents across all lenders. JPMorgan's came to 4.1 cents, Bank of America's to 4.3 and PNC's to 3.5. Among the 15 largest PPP lenders by dollars, three came out higher: Harvest Small Business Finance, Cross River Bank and Wells Fargo.
U.S. Bank's 2020 loans paid about $2,640 each, 3.8 cents per dollar. Its 2021 loans paid about $3,320 each, 6.9 cents per dollar. In 2021 it made 53,201 loans of $50,000 or less, for $879.6 million. The $2,500 rule paid $125.7 million on them. The 2020 rule would have paid $44.0 million.
We found no record of U.S. Bank sharing its fees with an agent. Agents sued for a share anyway. In California, American Video Duplicating named U.S. Bank with six other lenders. The court held on November 16, 2020 that the CARES Act "does not provide a private cause of action to recover agent fees absent an agreement between agent and lender" (order; The Agents Got Nothing). U.S. Bancorp also filed a notice of interested parties when agents asked for the cases to be combined (JPML papers); the Judicial Panel on Multidistrict Litigation said no (MDL 2950).
III. The queue suit, and the bank's own round one
On Sunday, April 19, 2020, two California businesses sued U.S. Bancorp and U.S. Bank in the Central District of California. Similar suits against JPMorgan, Wells Fargo and Bank of America were filed in the same court that day. The complaint alleged that "U.S. Bank prioritized loan applications seeking higher loan amounts because processing those applications first generated larger loan origination fees for the banks." Its evidence was the SBA's program-wide reports of April 13 and April 16. In those last three days, it said, "banks processed loan applications for $150,000 and under at twice the rate of larger loans" (Law Office of Irina Sarkisyan, Inc. v. U.S. Bancorp, C.D. Cal. No. 2:20-cv-03590, complaint, paras. 2 and 21). The claims are allegations.
U.S. Bank answered in a statement: "We plan to vigorously defend ourselves as it is without merit. The cumulative industry data provided by the SBA is not reflective of U.S. Bank's practices or results" (Politico, as quoted by Banking Dive, April 21, 2020). Its quarterly reports for June and September 2020 said the company was "subject to early-stage litigation concerning their participation in the PPP" (Forms 10-Q). The case closed on June 25, 2020 (CourtListener docket record).
U.S. Bank's own loans in the SBA file can be run through the complaint's test. Its first approvals are dated April 8. By the end of April 13 it had 640 loans approved; in the last three days of the round it added 16,731. The count of loans of $150,000 or less grew 26-fold over those three days, and the count of larger loans 32-fold. The approval date in the file is the SBA's, not the date the bank took the application, and loans canceled before 2024 are missing, so the test is rough.
The same file shows which of U.S. Bank's 2020 borrowers were approved before the money ran out on April 16:
| Share of 2020 loans approved by April 16 | $50,000 or less | $50,000 to $350,000 | $350,000 to $2 million | $2 million and up |
|---|---|---|---|---|
| U.S. Bank | 13.1% | 23.3% | 32.5% | 49.4% |
| JPMorgan Chase | 3.8% | 14.0% | 47.4% | 81.6% |
| PNC | 14.7% | 35.2% | 73.9% | 88.4% |
| Truist | 25.2% | 47.9% | 79.0% | 87.1% |
| TD Bank | 17.6% | 52.3% | 80.3% | 86.6% |
| Bank of America | 1.2% | 4.6% | 18.3% | 32.7% |
| Wells Fargo | 0.4% | 1.1% | 1.4% | 0.3% |
| All lenders | 21.4% | 49.7% | 69.4% | 77.5% |
At U.S. Bank a borrower of $2 million or more was 3.8 times as likely as one of $50,000 or less to be approved in round one. Across the program the ratio was 3.6; at JPMorgan it was 22. The round-one loans came to 21.1 percent of U.S. Bank's PPP dollars; for the program the figure was 40.3 percent. Most of U.S. Bank's 2020 lending came in the second round, from April 27 to August 8: 90,659 of its 108,030 loans that year, 83.9 percent, and $5.30 billion of its $7.59 billion, 69.9 percent.
The House Select Subcommittee on the Coronavirus Crisis had U.S. Bank's application dates, which the SBA file lacks. Its October 2020 staff report found that "U.S. Bank processed loans for applicants with over 100 employees in 15.6 days as compared to 15.7 days for single-employee applicants" ("Underserved and Unprotected," p. 15). It also found that U.S. Bank, unlike the other seven banks it examined, "allowed non-customers to apply for PPP loans through its online portal starting the first day of the program," and that non-customers were approved in 15.33 days on average, against 16.68 days for existing customers (p. 7). The first round lasted 14 days.
IV. What U.S. Bancorp disclosed
U.S. Bancorp's filings mention the PPP to explain other numbers. The 2020 annual report credits "higher loan fees driven in part by loans made under the SBA's Paycheck Protection Program" with offsetting part of a fall in the consumer and business banking segment's net interest income. The 2021 quarterly reports credit "higher loan fees related to the SBA Paycheck Protection Program." In January 2022 the company reported that net interest income had fallen from the third quarter "primarily due to lower interest and loan fees of approximately $82 million related to the SBA Paycheck Protection Program."
The number came afterward, in the slides. In April 2022, U.S. Bancorp's results presentations began to show a line called "PPP Income," which "Includes PPP interest income and PPP loan fees":
| Quarter | PPP income | Presentation |
|---|---|---|
| Q1 2021 | $91 million | April 14, 2022 |
| Q2 2021 | $95 million | April 14, 2022 |
| Q3 2021 | $128 million | April 14 and Oct. 14, 2022 |
| Q4 2021 | $48 million | Oct. 14, 2022 ($47 million in the April deck) |
| Q1 2022 | $24 million | April 14 and Oct. 14, 2022 |
| Q2 2022 | $14 million | Oct. 14, 2022 |
| Q3 2022 | $12 million | Oct. 14, 2022 |
The seven quarters add to $412 million. The figures start in 2021, the year after U.S. Bank made 108,030 of its PPP loans, and they include the 1 percent interest the loans paid. The model counts fees on loans as approved; the slides count fees and interest as the bank booked them. The two cannot be reconciled from what U.S. Bancorp published.
The compensation committee counted the program twice, once in each direction. In the 2021 proxy statement it "increased the Bonus Funding Percentage applicable to Ms. Kedia's Target Award Amount by 5% to recognize her significant leadership outside her normal responsibilities in supporting the company's participation in the CARES Act's Paycheck Protection Program in 2020." Gunjan Kedia was vice chair for wealth management and investment services. A year later the committee cut $0.42 from 2021 earnings per share, for bonus purposes, "to eliminate the positive impact of certain material items, including income from the accelerated timing of loan forgiveness from the government's pandemic-relief Paycheck Protection Program" (proxy statements filed March 9, 2021 and March 8, 2022).
Its July 2020 results slides listed "$30M in new and redirected community investments" and said the bank had "Facilitated $50 million in debt capital to seven Community Development Financial Institutions" that made PPP loans. Neither is tied to the fees in any filing we read.
V. The other "US Bank" in the SBA file
The SBA file has a second lender with nearly the same name: "US Bank National Association," in San Francisco. It made 21,234 loans for $3.08 billion, which the model prices at $111.3 million (lender page). The file lists U.S. Bank, National Association as the servicer of every one. Added to the Cincinnati lender, it would lift the total to $618.3 million.
Its 2020 loans run from April 4 to August 6, 2020: 13,796 of them, for $2.30 billion. MUFG Union Bank, a West Coast bank, said it helped "secure $2.7 billion of loans to 14,000 small business clients under the initial two phases" of the PPP (MUFG, 2020 corporate social responsibility report release, May 27, 2021). The SBA file names no MUFG Union Bank at all. U.S. Bancorp bought Union Bank on December 1, 2022, for $5.5 billion in cash and 44,374,155 shares (Form 8-K, Dec. 1, 2022). The San Francisco lender's last PPP approval in the file is dated June 15, 2021.
The file does not say what the San Francisco lender was. It does name other acquired lenders after their buyers, such as "Investors Bank, A Division of Citizens Bank National Association." The match points to Union Bank's loans, relabeled with the buyer's name. That is an inference from the match; no document we found states it. If so, the $111.3 million in fees was owed to Union Bank more than a year before U.S. Bancorp owned it, and it stays out of U.S. Bank's $506.9 million. Union Bank did say where some of its fees went. Its $10 million Community Recovery Program had given $3.3 million to more than 125 organizations in its first year, and "Funding for the program represents a portion of the fees Union Bank received processing Paycheck Protection Program loans."
VI. What U.S. Bank said
"Approximately 87 percent of these loans were for less than $100,000" (second-quarter 2020 results release). In the SBA file, 86.4 percent of the U.S. Bank loans approved by June 30, 2020 were for less than $100,000. They carried 31.3 percent of the dollars and 41.8 percent of the modeled fees.
"The cumulative industry data provided by the SBA is not reflective of U.S. Bank's practices or results" (April 2020). On the complaint's own test the bank's approvals agree: in the last three days of round one its larger loans grew faster than its small ones, the reverse of the industry pattern the complaint cited. In every size band, a smaller share of its 2020 borrowers was approved in round one than across the program.
"We plan to vigorously defend ourselves as it is without merit." The case lasted ten weeks.
"Helped more than 108,000 small businesses obtain Paycheck Protection Program loans" (Cecere, 2021). The sentence covers 2020. In 2021 U.S. Bank made 66,792 more, and they paid $222.0 million of the $506.9 million.
Method, and what would change the numbers
Modeled fees. Each loan in the SBA's PPP loan-level file (release of September 30, 2024) is priced under the fee rule for its approval date and draw; loans are counted by approval year. The model assumes the SBA paid a fee on every loan in the file. Fees on loans later canceled or reduced may not have been paid in full, so the modeled figures are fees owed, not received. The $506.9 million covers the lender the SBA names "U.S. Bank, National Association" (Cincinnati); it leaves out "US Bank National Association" (San Francisco), discussed in section V.
Round-one counts. Loans approved from April 3 through April 16, 2020, by the SBA's approval date, among loans still in the September 2024 file. Loans canceled before then are not in the file, so these counts are a floor. Size bands use the current approval amount; the under-$100,000 share in section VI uses the initial amount, as a borrower saw it in 2020.
Documented figures. Loan totals, PPP income, the $82 million quarterly change and the proxy statements' bonus terms are quoted from U.S. Bancorp's SEC filings. The PPP income figures appear only in chart images in the April 14 and October 14, 2022 presentations; the April deck gives the fourth quarter of 2021 as $47 million and the October deck as $48 million. The $412 million uses $48 million.
What is not public. U.S. Bank's fee total and its cost of processing PPP loans; its PPP income for 2020; the order that closed Sarkisyan; and the SBA's record of which bank made the loans now filed under "US Bank National Association."
Sources: SBA PPP loan-level data (Sept. 30, 2024), priced under 85 FR 20811, 86 FR 3692 and 86 FR 3712 (U.S. Bank lender page; US Bank National Association lender page; PPP lenders by estimated fees; fee schedules by vintage; PPP per-lender totals); U.S. Bancorp second-quarter 2020 results release and presentation (Form 8-K, July 15, 2020); Forms 10-Q for the quarters ended June 30 and Sept. 30, 2020 and Sept. 30, 2021; 2020 Annual Report (Exhibit 13 to Form 10-K, filed Feb. 23, 2021); fourth-quarter 2021 results release (Form 8-K, Jan. 19, 2022); first-quarter and third-quarter 2022 results presentations (Forms 8-K, April 14 and Oct. 14, 2022); proxy statements filed March 9, 2021 and March 8, 2022; Form 8-K, Dec. 1, 2022 (Union Bank acquisition); MUFG Americas, "MUFG Releases 2020 Corporate Social Responsibility Report" (May 27, 2021); Law Office of Irina Sarkisyan, Inc. v. U.S. Bancorp, C.D. Cal. No. 2:20-cv-03590, Dkt. 1 (April 19, 2020); Banking Dive, "JPMorgan, Wells Fargo, Bank of America, U.S. Bank chased larger PPP loans' fees, lawsuit says" (April 21, 2020); House Select Subcommittee on the Coronavirus Crisis, "Underserved and Unprotected" (October 2020); American Video Duplicating, Inc. v. Citibank, N.A., C.D. Cal. No. 2:20-cv-03815 (order); In re PPP Agent Fees Litigation, MDL No. 2950 (JPML papers; order). Related: How Much Did Womply Make From Pandemic Relief?; The Banks Served Their Own Customers First, and Courts Shrugged