U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q2 2020 Earnings Presentation
32 slides from U.s. Bancorp's earnings presentation, Jul 15, 2020
Slide 1: U.S. Bancorp 2Q20 Earnings Conference Call
U.S. Bancorp 2Q20 Earnings Conference Call July 15, 2020 U.S. BANCORP
Slide 2: Forward-looking Statements and Additional Information
Forward-looking Statements and Additional Information 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 st
Slide 3: 2Q20 Highlights
2Q20 Highlights Income Statement change vs. Credit Quality change vs. $ in millions, except EPS 2Q20 1Q20 2Q19 $ in millions 2Q20 1Q20 2Q19 Net interest income* $3,224 (0.7) % (3.2) % Nonperforming assets $1,173 24.0 % 23.1 % Noninterest income 2,614 3.5 5.0 NPA ratio 0.38 % 8 bps 5 bps Reported net
Slide 4: Performance Ratios
Performance Ratios Return on Return on Return on Efficiency Ratio* & Average Assets Average Common Equity Tangible Common Equity* Net Interest Margin** 1.55% 15.0% 19.2% 58.0% 57.6% 54.3% 0.95% 9.7% 12.6% 3.13% 0.51% 5.3% 7.1% 2.91% 2.62% 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 *
Slide 5: Digital Engagement Trends
Digital Engagement Trends Transactions (% of Total) 80% 76% 65% 67% Digital Active Customers 60% (% of Total Active Customers)* 40% 35% 33% 80% 77% 24% 72% 70% 20% 0% 60% 55% 56% Three months ended 54% 52% 5/31/18 5/31/19 5/31/20 50% 44% Total Digital Branch, ATM, Phone and IVR 40% Loan Sales (% of
Slide 6: Average Loans
Average Loans Change vs. (Three months ended 6/30/20) Avg. Balances 1Q20 2Q19 $318.1 Commercial $128.0 20.8 % 24.0 % $289.2 $297.7 Commercial Real Estate 41.1 2.5 4.4 Residential Mortgages 71.1 0.3 6.4 Credit Card 21.5 (9.8) (5.8) Retail 56.4 (0.9) (1.1) $289.2 $297.7 $318.1 Total loans $318.1 6.9 %
Slide 7: Average Deposits
Average Deposits Interest-bearing Deposits Average Change vs. Change $362.8 $403.3 Balances 1Q20 2Q19 Rates vs. 1Q20 (Three months ended 6/30/20) $345.2 Money market savings $129.7 6.4 % 19.4 % 0.30 % (0.72) % Interest checking 83.8 8.3 19.0 0.05 (0.16) Savings accounts 51.2 6.6 11.4 0.09 (0.13) Tim
Slide 8: Credit Quality
Credit Quality Net Charge-offs Nonperforming Assets $437 $1,173 $393 NCO Ratio NPAs $350 $953 $946 +2 bps QoQ +24.0% QoQ 0.49% 0.53% 0.55% +6 bps YoY 0.33% 0.38% +23.1% YoY 0.30% 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 NCOs NCOs/Avg Loans NPAs NPAs/Period-end Loans plus OREO Provision for Credit Losses $1,300
Slide 9: Credit Risk Management – Consistent Underwriting
Credit Risk Management – Consistent Underwriting 2Q20 Wtd Avg Commercial Exposures by Impacted Industries** FICO/Bond rating 2Q20 Avg Portfolio equivalent * LTV * 2Q20 2Q20 Commitments Loans Residential mortgage 768 68% Retail (includes Restaurants) 5.4% 4.6% Autos 3.0% 2.1% Home equity 791 65% Ener
Slide 10: Earnings Summary
Earnings Summary $ and shares in millions, except EPS Reported % Change 2Q20 1Q20 2Q19 vs. 1Q20 vs. 2Q19 Net Interest Income $3,200 $3,223 $3,305 (0.7) (3.2) Taxable-equivalent Adjustment 24 24 27 - (11.1) Net Interest Income (taxable-equivalent basis) 3,224 3,247 3,332 (0.7) (3.2) Noninterest Incom
Slide 11: Net Interest Income
Net Interest Income $3,332 $3,247 Linked Quarter $3,224 • Net interest income decreased, primarily driven by the impact of lower interest rates, partially offset by loan growth and the benefit of deposit pricing and funding mix. • The net interest margin decreased, primarily due to impact of the low
Slide 12: Noninterest Income
Noninterest Income $2,614 Linked Quarter $2,490 $2,525 • Payment services revenue declined, driven by lower credit and debit card $189 revenue, lower corporate payment products revenue and lower merchant $395 $648 processing services revenue driven by lower sales volume due to the worldwide $415 imp
Slide 13: Payment Services Fee Revenue
Payment Services Fee Revenue Select Revenue Exposure, YTD 2020 Contribution to U.S. Bank’s Net Revenues Merchant Acquiring - 5.2% Retail Payment Solutions - 2.6% Corporate Payment Systems - 2.1% Corporate Payment Systems Revenue Merchant Acquiring Revenue Travel & Commercial revenue breakdown: Hospi
Slide 14: Noninterest Expense
Noninterest Expense Linked Quarter $3,316 $3,318 • Compensation expense increased, primarily due to merit and revenue- $3,153 related expenses. $289 $309 $270 $276 $271 • Technology and communications expense increased, primarily due to $281 $245 $245 capital expenditures supporting business growth.
Slide 15: Capital Position
Capital Position $ in billions 2Q20 1Q20 4Q19 3Q19 2Q19 Total U.S. Bancorp shareholders' equity $51.9 $51.5 $51.9 $53.5 $52.9 Basel III Standardized Approach Common equity tier 1 capital ratio 9.0% 9.0% 9.1% 9.6% 9.5% Tier 1 capital ratio 10.6% 10.5% 10.7% 11.2% 11.0% Total risk-based capital ratio
Slide 16: Responding to Challenging Times
Responding to Challenging Times Customers Communities Employees • Paycheck Protection Program • $30M in new and redirected • Thoughtful and measured return • Funding approval secured for community investments to office strategies over 101,000 applicants • Virtual volunteer network • Creation of ente
Slide 17: Appendix
Appendix U.S. BANCORP | 17
Slide 18: Average Loans
Average Loans Average Loans ($bn) Key Points Year-over-Year Growth vs. 2Q19 • Average total loans increased by $28.9 billion, or 10.0% 3.8% 4.0% 3.9% 4.0% 10.0% • Average commercial loans increased by $24.8 billion, $318.1 or 24.0% $289.2 $292.4 $294.9 $297.7 • Average residential mortgage loans inc
Slide 19: Average Deposits
Average Deposits Average Deposits ($bn) Key Points Year-over-Year Growth vs. 2Q19 3.1% 6.0% 6.6% 8.2% 16.8% • Average total deposits increased by $58.1 billion, or 16.8% $403.3 $356.5 $362.8 • Average low-cost deposits (NIB, interest $345.2 $349.9 30.1% checking, savings and money market) (3.7%) 1.0
Slide 20: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 Average Loans $103,233 $105,987 $128,039 1.2% 0.4% 0.2% 2.0% 20.8% 30-89 Delinquencies 0.34% 0.28% 0.33% $128,039 90+ Delinquencies 0.26% 0.06% 0.07% $105,987 Nonperformi
Slide 21: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 Average Loans $39,365 $40,078 $41,088 (0.3%) (1.0%) 1.9% 0.9% 2.5% 30-89 Delinquencies 0.07% 0.20% 0.25% 90+ Delinquencies 0.00% 0.00% 0.00% $39,365 $38,990 $
Slide 22: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 Average Loans $66,834 $70,892 $71,122 1.9% 2.7% 1.9% 1.4% 0.3% 30-89 Delinquencies 0.26% 0.23% 0.34% 90+ Delinquencies 0.17% 0.15% 0.16% $68,608 $69,909 $70,892
Slide 23: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 Average Loans $22,830 $23,836 $21,510 1.0% 3.7% 1.8% (1.1%) (9.8%) 30-89 Delinquencies 1.23% 1. 29% 1.08% $23,681 $24,107 $23,836 $22,830 90+ Delinquencies 1.14% 1.29% 1
Slide 24: Credit Quality – Home Equity
Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 Average Loans $15,831 $14,838 $14,386 (1.0%) (1.5%) (2.4%) (2.5%) (3.0%) 30-89 Delinquencies 0.51% 0.53% 0.46% $15,831 90+ Delinquencies 0.34% 0.30% 0.37% $15,601 $15,22
Slide 25: Credit Quality – Retail Leasing
Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 (0.5%) (1.2%) 0.5% (0.1%) (0.7%) Average Loans $8,547 $8,474 $8,412 30-89 Delinquencies 0.45% 0.52% 0.51% $8,547 $8,442 $8,486 $8,474 $8,412 3.0% 90+ Delinquencies 0.
Slide 26: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 Average Loans $32,578 $33,552 $33,550 2.1% 2.7% 0.2 % 0.1% 0.0% 30-89 Delinquencies 0.80% 0.79% 0.43% $32,578 $33,454 $33,509 $33,552 $33,550 90+ Delinquencies 0.13% 0.
Slide 27: Credit Quality – Auto Loans
Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q19 1Q20 2Q20 Average Loans $19,023 $19,276 $18,758 1.0% 2.1% 0.0% (0.8%) (2.7%) 30-89 Delinquencies 1.01% 1.08% 0.56% $19,426 $19,434 90+ Delinquencies 0.09% 0.12% 0.07% $19,023 $19,2
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures (Dollars in Millions, Unaudited) Three Months Ended June 30, March 31, June 30, 2020 2020 2019 Net interest income $3,200 $3,223 $3,305 Taxable-equivalent adjustment (4) 24 24 27 Net interest income, on a taxable-equivalent basis 3,224 3,247 3,332 Net interest income, on
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended June 30, March 31, June 30, (Dollars in Millions, Unaudited) 2020 2020 2019 Net income applicable to U.S. Bancorp common shareholders $614 $1,088 $1,741 Intangibles amortization (net-of-tax) 34 33 33 Net income applicable to U.S. Bancorp common sharehol
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures June 30, March 31, December 31, September 30, June 30, (Dollars in Millions, Unaudited) 2020 2020 2019 2019 2019 Total equity $52,480 $52,162 $52,483 $54,147 $53,540 Preferred stock (5,984) (5,984) (5,984) (5,984) (5,984) Noncontrolling interests (630) (630) (630) (630) (
Slide 31: Notes
Notes (1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements. (2) Includes the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology net of deferred
Slide 32: U.S. Bancorp 2Q20 Earnings Conference Call
U.S. Bancorp 2Q20 Earnings Conference Call July 15, 2020 U.S. BANCORP