U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q4 2018 Earnings Presentation
29 slides from U.s. Bancorp's earnings presentation, Jan 16, 2019
Slide 1: U.S. Bancorp 4Q18 Earnings Conference Call
U.S. Bancorp 4Q18 Earnings Conference Call January 16, 2019 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: Today’s presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including
Slide 3: 4Q18 Highlights
4Q18 Highlights Income Statement change vs. Credit Quality change vs. $ in millions, except EPS 4Q18 3Q18 4Q17 $ in millions 4Q18 3Q18 4Q17 Net interest income* $3,331 1.5 % 3.2 % Nonperforming assets $989 (1.5) % (17.6) % Noninterest income 2,498 3.3 5.4 NPA ratio 0.34% (2bps) (9bps) Reported net i
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 69.8% 1.59% 15.5% 15.8% 20.2% 1.58% 19.9% 14.7% 18.8% 1.46% 15.4%* 19.7%* 56.3% 1.55%* 53.5% 13.4%* 55.0%* 54.0%* 1.33%* 17.0%* 3.11% 3.15% 3.15% 4Q
Slide 5: Average Loans
Average Loans Average Change vs. (Three months ended 12/31/18) Balances 3Q18 4Q17 $281.1 $283.7 Commercial $100.5 1.5 % 3.0 % $279.8 Commercial Real Estate 40.2 1.5 (2.1) Residential Mortgages 64.5 3.9 8.1 Credit Card 22.4 2.9 5.6 Retail 56.1 0.4 (1.7) Covered - nm nm Total loans $283.7 0.9 % 1.4 %
Slide 6: Average Deposits
Average Deposits Interest-bearing Deposits Average Change vs. Change $339.2 $330.1 $334.4 (Three months ended 12/31/18) Balances 3Q18 4Q17 Rates vs. 3Q18 Money market savings $99.6 (1.1) % (5.5) % 1.33 % 0.20 % Interest checking 71.0 2.4 0.4 0.31 0.10 Savings accounts 44.5 (0.7) 1.8 0.18 0.04 Time d
Slide 7: Credit Quality
Credit Quality Net Charge-offs Nonperforming Assets $353 $325 $328 NCO Ratio $1,200 NPAs +3 bps QoQ $1,004 $989 -1.5% QoQ 0.46% 0.46% 0.49% +3 bps YoY 0.43% 0.36% 0.34% -17.6% YoY 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 NCOs NCOs/Avg Loans NPAs NPAs/Period-end Loans plus OREO Provision for Credit Losses $15 $
Slide 8: Earnings Summary
Earnings Summary Excluding $ and shares in millions, except EPS Reported Notable Items Notable Items 4Q18 4Q17 % Change 4Q18 4Q17 % Change Net Interest Income $3,303 $3,175 4.0 $- $- 4.0 Taxable-equivalent Adjustment 28 53 (47.2) - - (47.2) Net Interest Income (taxable-equivalent basis) 3,331 3,228
Slide 9: Notable Items
Notable Items 4Q18 notable items include: • $340 million gain on sale of ATM servicing business • $264 million in charges for asset impairments related to sale of FDIC covered loans and certain other assets • $174 million in severance charges and legal accruals • $140 million favorable adjustment to
Slide 10: Net Interest Income
Net Interest Income $3,281 $3,331 $3,228 Linked Quarter • Net interest income growth was primarily driven by the impact of higher interest rates and earning assets growth, partially offset by higher rates on deposits and funding mix shift. • The net interest margin was flat reflecting the impact of
Slide 11: Noninterest Income
Noninterest Income $2,418 $2,498 Linked Quarter $2,370 $171 $202 $174 • Payments revenue growth was driven by seasonally $409 higher sales volumes in credit and debit card revenue, $394 $411 partially offset by seasonally lower corporate payment $396 products revenue. $426 $429 • Service charges rev
Slide 12: Noninterest Expense
Noninterest Expense $3,899 Linked Quarter $236 $259 • Noninterest expense increased primarily due to an increase in $3,280 $444 $3,044 $254 compensation expense, seasonally higher professional $247 $266 services expense, and growth in other noninterest expense. $270 $328 • Other noninterest expense
Slide 13: Capital Position
Capital Position $ in billions 4Q18 3Q18 2Q18 1Q18 4Q17 Total U.S. Bancorp shareholders' equity $51.0 $50.4 $49.6 $49.2 $49.0 Basel III Standardized Approach Common equity tier 1 capital ratio 9.1% 9.0% 9.1% 9.0% 9.3% Tier 1 capital ratio 10.7% 10.6% 10.5% 10.4% 10.8% Total risk-based capital ratio
Slide 14: Appendix
Appendix U.S. BANCORP | 14
Slide 15: Average Loans
Average Loans Average Loans ($bn) Key Points Year-over-Year Growth vs. 4Q17 • Average total loans increased by $3.9 billion, or 1.4% 2.6% 2.3% 1.1% 1.2% 1.4% • Average residential mortgage loans increased by $279.8 $279.4 $278.6 $281.1 $283.7 $4.8 billion, or 8.1% 6.1% (1.7%) • Average commercial lo
Slide 16: Average Deposits
Average Deposits Average Deposits ($bn) Key Points Year-over-Year Growth vs. 4Q17 3.0% 1.9% 1.1% (1.5%) (1.4%) • Average total deposits decreased by $4.8 billion, or 1.4% $339.2 $334.6 $334.8 $334.4 $330.1 • Average low-cost deposits (NIB, interest (3.0%) (1.6%) (4.5%) (6.2%) checking, savings and m
Slide 17: Credit Quality – Commercial Loans
Credit Quality – Commercial Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q17 3Q18 4Q18 Average Loans $97,558 $99,048 $100,515 1.0% (0.1%) 0.9% 0.7% 1.5% 30-89 Delinquencies 0.26% 0.23% 0.31% $99,048 $100,515 90+ Delinquencies 0.06% 0.06% 0.07% $97,558
Slide 18: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics $mm 4Q17 3Q18 4Q18 Linked Quarter Growth Average Loans $41,009 $39,542 $40,149 (1.5%) (1.6%) (1.3%) (0.8%) 1.5% 30-89 Delinquencies 0.09% 0.08% 0.18% 90+ Delinquencies 0.01% 0.01% 0.00% $41,009 $40,3
Slide 19: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q17 3Q18 4Q18 Average Loans $59,639 $62,042 $64,476 1.0% 0.9% 1.1% 2.0% 3.9% 30-89 Delinquencies 0.33% 0.27% 0.27% $62,042 $64,476 90+ Delinquencies 0.22% 0.19% 0.18% $59,639
Slide 20: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q17 3Q18 4Q18 Average Loans $21,218 $21,774 $22,396 1.4% 0.3% (0.3%) 2.6% 2.9% 30-89 Delinquencies 1.37% 1.42% 1.39% $21,774 $22,396 90+ Delinquencies 1.28% 1.18% 1.25% $21,218 $21,28
Slide 21: Credit Quality – Home Equity
Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q17 3Q18 4Q18 Average Loans $16,299 $16,000 $16,065 0.0% (0.6%) (0.9%) (0.3%) 0.4% 30-89 Delinquencies 0.48% 0.45% 0.56% $16,299 $16,195 $16,048 $16,000 $16,065 90+ Delinquencies 0.28
Slide 22: Credit Quality – Retail Leasing
Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q17 3Q18 4Q18 Average Loans $7,982 $8,383 $8,489 2.8% 0.0% 2.1% 2.9% 1.3% 30-89 Delinquencies 0.41% 0.38% 0.43% 90+ Delinquencies 0.03% 0.02% 0.04% $8,150 $8,383 $8,489 $7,982 $7,9
Slide 23: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q17 3Q18 4Q18 Average Loans $32,856 $31,520 $31,587 2.6% 0.1% (4.9%) 0.8% 0.2% 30-89 Delinquencies 0.80% 0.83% 0.87% $32,856 $32,874 90+ Delinquencies 0.15% 0.14% 0.15% $31,265 $31,5
Slide 24: Credit Quality – Auto Loans
Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q17 3Q18 4Q18 Average Loans $18,754 $18,563 $18,500 4.1% 0.6% (1.4%) (0.2%) (0.3)% 30-89 Delinquencies 0.95% 1.00% 1.04% $18,754 $18,868 $18,599 $18,563 90+ Delinquencies 0.08% 0.08% 0
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures December 31, September 30, June 30, March 31, December 31, (Dollars in Millions, Unaudited) 2018 2018 2018 2018 2017 Total equity $51,657 $51,007 $50,257 $49,812 $49,666 Preferred stock (5,984) (5,984) (5,419) (5,419) (5,419) Noncontrolling interests (628) (632) (629) (62
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures (Dollars in Millions, Unaudited) Three Months Ended December 31, September 30, December 31, 2018 2018 2017 Net interest income $3,303 $3,251 $3,175 Taxable-equivalent adjustment (2) 28 30 53 Net interest income, on a taxable-equivalent basis 3,331 3,281 3,228 Net interest
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended December 31, September 30, December 31, (Dollars in Millions, Unaudited) 2018 2018 2017 Net income applicable to U.S. Bancorp common shareholders $1,777 $1,611 Less: Notable items (5) 45 150 Net income applicable to U.S. Bancorp common shareholders, exc
Slide 28: Notes
Notes (1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements. (2) Interest and rates are presented on a fully taxable-equivalent basis based on a federal income tax rate of 21 percent for 2018 and 35 percent for 2017. (3)
Slide 29: U.S. Bancorp 4Q18 Earnings Conference Call
U.S. Bancorp 4Q18 Earnings Conference Call January 16, 2019 U.S. BANCORP