A minute typo caused a large misrepresentation in part of U.S. Bancorp's annual report, making it look like the bank's loans had increased in value when they had actually declined.
It appeared to be a transposing error within a footnote, as the balance sheet for the year-end financials — released in mid-March — showed the correct number of $381.3 billion for the carrying value (total loans less allowance for loan losses). But a separate table estimating the bank's fair values of various financial assets and liabilities instead reported that as $318.3 billion.
So that then made the fair market value of the bank's loans at the end of last year $368.9 billion, meaning the loans were worth $50.6 billion more than when they originated. But with the correct carrying value, the loans were actually worth $12.4 billion less.
"We had a typo in a footnote in our [annual report]. The typo did not flow through to any other number or create any errors in either the footnote or in any other part of the document. The information was correct on the balance sheet," said Jeff Shelman, a spokesman for U.S. Bank.
The typo drew notice — including from the Wall Street Journal, which first reported it Wednesday — amid ongoing uncertainty in the banking industry after the mid-March collapses of California's Silicon Valley Bank and New York's Signature Bank. Analysts look for differences between fair values and balance-sheet values of a bank's assets to gauge its financial health. In this case, U.S. Bancorp overstated its assets, making it seem stronger than it was.
Earlier this month, U.S. Bank provided $1 billion in uninsured deposits as part of a $30 billion rescue package 11 of the nation's biggest banks put together to save First Republic Bank soon after the two other failures. Minneapolis-based U.S. Bancorp — the fifth-largest bank in the country — is U.S. Bank's parent company.
