U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q3 2022 Earnings Presentation
32 slides from U.s. Bancorp's earnings presentation, Oct 14, 2022
Slide 1: U.S. Bancorp 3Q22 Earnings Conference Call
U.S. Bancorp 3Q22 Earnings Conference Call October 14, 2022 Exhibit 99.2
Slide 2: Forward-looking statements
The following information appears in accordance with the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-l
Slide 3: 3Q22 Highlights
3Q22 Highlights 1 Taxable-equivalent basis; see slide 28 for calculation 2 Common equity tier 1 capital to risk-weighted assets, reflecting the full implementation of the current expected credit losses methodology was 9.4% as of 9/30/22. 3 Non-GAAP; see slide 30 for calculations 4 Earnings returned
Slide 4: Performance Ratios
Performance Ratios Return on Average Assets Efficiency Ratio1 & Net Interest Margin2 Return on Average Common Equity Return on Tangible Common Equity1 1 Non-GAAP; see slides 28 and 29 for calculations 2 Net interest margin on a taxable-equivalent basis 3 Non-GAAP; Excluding merger and integration ch
Slide 5: Digital Engagement Trends
1 Represents core Consumer Banking customers active in at least one channel in the previous 90 days 2 Interactive Voice Response Total Digital includes both online and mobile platforms Digital Engagement Trends 8/31/22 2
Slide 6: Digital and Payments Initiatives
Commercial and Large Corporate Business Banking Consumer Banking ~6x >17x FY20 RTP Transactions at U.S. Bank First in market to send RTP2 Transaction Multiple ways to integrate RTP products #1 are out of U.S. Bank’s footprint ~50% New State Farm Deposit Accounts1 are new customers to U.S. Bank ~80%
Slide 7: Business Banking and Payments Trends
Business Banking and Payments Trends With 1.1 million business1 banking relationships, there is a significant opportunity for us to deepen current relationships and acquire new customers. Banking and Payments2 Relationships Business Banking only Business Banking & Payments Payments only Payments & B
Slide 8: Average Loans
Average Loans +3.9% linked quarter +13.5% year-over-year On a linked quarter basis, average total loans were higher primarily due to higher commercial loans, higher residential mortgages and higher credit card loans. On a year-over-year basis, average total loans were higher primarily due to growth
Slide 9: Average Deposits
Average Deposits +0.1% linked quarter +5.9% year-over-year Interest-bearing Deposits Average noninterest-bearing (NIB) deposits decreased on a linked quarter basis and on a year-over-year basis. On a linked quarter basis, the decrease was driven by Corporate and Commercial Banking and Wealth Managem
Slide 10: Credit Quality
NCO Ratio -1 bps QoQ -1 bps YoY NPAs -12.1% QoQ -28.3% YoY $ in millions, except allowance for credit losses in billions Allowance for Credit Losses by Loan Class, 3Q22 Amount ($B) Loans and Leases Outstanding (%) Commercial $2.0 1.5% Commercial Real Estate 1.0 2.4% Residential Mortgage 0.7 0.8% Cre
Slide 11: Earnings Summary
Earnings Summary 1 Merger and integration-related charges associated with the planned acquisition of MUFG Union Bank.
Slide 12: Net Interest Income
Net Interest Income +11.3% linked quarter +20.6% year-over-year $ in millions 1 Includes PPP interest income and PPP loan fees Net interest income on a taxable-equivalent basis; see slide 28 for calculation Including PPP Excluding PPP +11.4% linked quarter +25.3% year-over-year $3,197 $3,464 $3,857
Slide 13: Noninterest Income
Noninterest Income -3.1% linked quarter -8.3% year-over-year Linked Quarter Mortgage banking revenue decreased, reflecting lower volumes of performing loan sales and a decrease in the fair value of mortgage servicing rights, net of hedging activities. Payment services revenue decreased, as credit ca
Slide 14: Payment Services Fee Revenue Growth
Payment Services Fee Revenue Growth 1 Includes prepaid card
Slide 15: Payments Revenue Breakdown
Merchant Processing Credit and Debit Card1 Corporate Payments All Other Revenue Payments Revenue Breakdown Total payments revenue, which includes net interest income and fee revenue, accounted for 26% of 3Q22 net revenue. Total payment fee revenue grew nearly 4.9% year-over-year due to the continued
Slide 16: Noninterest Expense
Noninterest Expense -2.3% linked quarter +6.1% year-over-year Linked Quarter Compensation expense increased, primarily due to the number of payroll days in the quarter along with higher performance-based incentives, partially offset by lower variable compensation. Professional services expense incre
Slide 17: Capital Position
Capital Position 1 Ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology 2 Non-GAAP; see slide 30 for calculations
Slide 18: Outlook
1 All guidance for stand alone USB 2 Core guidance excludes notable items for merger and integration charges associated with the planned acquisition of MUFG Union Bank 3 Excludes $42 million of merger and integration-related charges associated with the planned acquisition of MUFG Union Bank Outlook1
Slide 19: Union Bank Acquisition Update
Progress What’s Next Integration planning including technology and business line operations largely complete $100 billion community benefits plan announced Participated in numerous stakeholder town-hall meetings Participated in a joint public meeting with the Fed and OCC Entered into a Letter of Agr
Slide 20: Appendix
Appendix
Slide 21: Average Loans
Average Loans Key Points Commercial CRE Res Mtg Other Retail Credit Card Average Loans ($bn) Linked Quarter Average total loans increased by $12.6 billion, or 3.9% Average commercial loans increased by $7.9 billion, or 6.5% Average residential mortgage loans increased by $3.8 billion, or 4.7% Averag
Slide 22: Average Deposits
Key Points Average Deposits ($bn) Linked Quarter Average total deposits increased by $0.3 billion, or 0.1% Average low-cost deposits (NIB, interest checking, savings and money market) decreased by $9.0 billion, or 2.1% Year-over-Year Average total deposits increased by $25.3 billion, or 5.9% Average
Slide 23: Credit Quality – Commercial
Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $mm3Q21 2Q22 3Q22 Average Loans$101,832 $120,657 $128,519 30-89 Delinquencies0.16% 0.20% 0.25% 90+ Delinquencies0.04% 0.07% 0.03% Nonperforming Loans0.21% 0.12% 0.09% (1.1%) 2.6% 8.0% 6.9% 6.5% Average loans increased by 6.5% on
Slide 24: Credit Quality – Commercial Real Estate
$mm3Q21 2Q22 3Q22 Average Loans$38,921 $39,517 $40,010 30-89 Delinquencies0.08% 0.06%0.02% 90+ Delinquencies0.05%0.01%0.05% Nonperforming Loans0.76% 0.52% 0.41% Linked Quarter Growth 0.9% (0.2%) 0.6% 1.1% 1.2% Average loans increased by 1.2% on a linked quarter basis Continued low loss rates were su
Slide 25: Credit Quality – Residential Mortgage
$mm3Q212Q223Q22 Average Loans$74,104 $80,228$84,018 30-89 Delinquencies0.20%0.12% 0.10% 90+ Delinquencies0.15% 0.12% 0.10% Nonperforming Loans0.32%0.27%0.24% 1.0% 2.4% 2.1% 3.6% 4.7% Key Points Average loans increased by 4.7% on a linked quarter basis reflecting a combination of home purchases and s
Slide 26: Credit Quality – Credit Card
$mm3Q212Q223Q22 Average Loans$21,905 $22,748 $24,105 30-89 Delinquencies0.83% 0.84% 0.97% 90+ Delinquencies0.66%0.69% 0.74% Nonperforming Loans - %- %- % 3.7% 2.3% (2.5%) 4.1% 6.0% Key Points Linked Quarter Growth Average loans increased by 6.0% on a linked quarter basis Net charge-off ratio remaine
Slide 27: Credit Quality – Other Retail
$mm3Q212Q223Q22 Average Loans$59,977 $61,037$60,126 30-89 Delinquencies0.41%0.39% 0.41% 90+ Delinquencies0.11%0.10% 0.11% Nonperforming Loans0.26%0.24% 0.22% 2.9% 1.9% 1.0% (1.2%) (1.5%) Key Points Linked Quarter Growth Average loans decreased by (1.5%) on a linked quarter basis Continued low net ch
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1), (2) – see slide 31 for corresponding notes
Slide 29: Non-GAAP Financial Measures
(2), (3) – see slide 31 for corresponding notes Non-GAAP Financial Measures
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures 1 Preliminary data. Subject to change prior to filings with applicable regulatory agencies. (3), (4), (5) – see slide 31 for corresponding notes
Slide 31: Notes
Notes Based on a federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes. Notable items for the three months ended September 30, 2022 include $42 million ($33 million after-tax) of merger and integration charges a
Slide 32: us bank
us bank