U.S. Bancorp, the fifth-largest employer in downtown Minneapolis, is not planning any big downsizing of space when its workers return to the office.

"We have, I think, the right level of space in the downtown area," Terry Dolan, chief financial officer, said Thursday as the company reported better-than-expected first-quarter earnings. "So we're pretty committed to downtown and certainly to the Minneapolis-St. Paul market."

Downtown boosters and commercial real estate agents have been worried that employers could significantly pull back on their office space in the coming months as they adopt more flexible schedules where employees split their time between working from home and coming to the office. Target Corp.'s announcement last month that it will exit the City Center and shrink its footprint downtown by a third was a wake-up call for many.

U.S. Bancorp has about 5,000 employees who work in downtown Minneapolis.

Dolan said executives haven't made any firm decisions yet about when workers will return to the office, but they plan to communicate a time frame to employees either later this spring or early this summer. Wells Fargo, another big downtown employer, recently said its employees will head back to offices in September.

"Like most companies, we're looking at different approaches with respect to what return to the office might look like," Dolan added. "That's still in flux because there's still a lot to learn associated with that."

On Thursday, U.S. Bancorp executives were so upbeat about the economic recovery that they decided to release more than $1 billion they stashed away last year to cover potential loan defaults from the pandemic. The move led to a near-doubling of U.S. Bancorp's first-quarter profit, which was $2.28 billion.

Other big banks have made similar actions to free up reserves for loan losses in recent months, a sign that they are increasingly optimistic about the strength of the economic recovery.

U.S. Bancorp had been hesitant to do so in January, with executives pointing then to some continued uncertainty.

But now with vaccines and additional government relief rolling out as well as reduced levels of new virus cases, executives said the economic outlook was clearly improving.

"When we look at the second half of the year, we think consumer spend is going to start to take off and that's going to have some really positive impacts from an economic standpoint," said Dolan.

The bank has now released roughly half of the additional reserves it built up last year to cover potential bad loans.

Still, U.S. Bancorp's top line struggled a bit in the first quarter. Revenue declined 5.2% from a year ago to $5.47 billion.

Net interest income declined 4.9% largely driven by lower rates and related mortgage refinancing activities compared to a year ago. But the company said it expects opportunities for growth in this area in future quarters.

Noninterest income also decreased 5.7%, largely due to lower mortgage banking revenue, deposit service charges, security gains and other noninterest income. Its payment services revenue was essentially flat compared to a year ago as consumer spending has strengthened driven by government relief, states easing up on restrictions and consumer behavior beginning to normalize.

Average total loans for the first quarter was $3.7 billion, a 1.2% decline from a year ago, mostly because of a drop in commercial loans due to paydowns by corporate customers, lower credit card loans fueled by stimulus payments, and lower home equity and second mortgages as customers focused more on refinancing.

The company's noninterest expenses also increased 1.9% as a result of performance-based incentive compensation and technology and communications charges.