U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q3 2019 Earnings Presentation
28 slides from U.s. Bancorp's earnings presentation, Sep 16, 2019
Slide 1: U.S. Bancorp 3Q19 Earnings Conference Call
U.S. Bancorp 3Q19 Earnings Conference Call October 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: 3Q19 Highlights
3Q19 Highlights Income Statement change vs. Credit Quality change vs. $ in millions, except EPS 3Q19 2Q19 3Q18 $ in millions 3Q19 2Q19 3Q18 Net interest income* $3,306 (0.8) % 0.8 % Nonperforming assets $979 2.7 % (2.5) % Noninterest income 2,614 5.0 8.1 NPA ratio 0.33% - (3 bps) Reported net income
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** 1.58% 1.55% 1.57% 15.5% 15.3% 19.9% 19.4% 15.0% 19.2% 53.5% 54.3% 53.3% 3.15% 3.13% 3.02% 3Q18 2Q19 3Q19 3Q18 2Q19 3Q19 3Q18 2Q19 3Q19 3Q18 2Q19 3Q1
Slide 5: Average Loans
Average Loans Change vs. $289.2 $292.4 (Three months ended 9/30/19) Avg. Balances 2Q19 3Q18 $281.1 Commercial $103.6 0.4 % 4.7 % Commercial Real Estate 39.0 (1.0) (1.4) Residential Mortgages 68.6 2.7 10.6 Credit Card 23.7 3.7 8.8 Retail 57.5 0.9 2.9 Covered - - nm Total loans $292.4 1.1 % 4.0 % Tota
Slide 6: Average Deposits
Average Deposits Interest-bearing Deposits $345.2 $349.9 Average Change vs. Change $330.1 (Three months ended 9/30/19) Balances 2Q19 3Q18 Rates vs. 2Q19 Money market savings $114.5 5.4 % 13.7 % 1.55 % (0.06) % Interest checking 72.0 2.2 3.9 0.31 0.01 Savings accounts 46.3 0.8 3.3 0.25 0.02 Time depo
Slide 7: Credit Quality
Credit Quality Net Charge-offs Nonperforming Assets $350 $352 $328 NCO Ratio NPAs $1,004 $979 -1 bp QoQ $953 +2.7% QoQ 0.46% 0.49% 0.48% +2 bps YoY -2.5% YoY 0.36% 0.33% 0.33% 3Q18 2Q19 3Q19 3Q18 2Q19 3Q19 NCOs NCOs/Avg Loans NPAs NPAs/Period-end Loans plus OREO Provision for Credit Losses $15 $10 $
Slide 8: Earnings Summary
Earnings Summary $ and shares in millions, except EPS Reported % Change 3Q19 2Q19 3Q18 vs. 2Q19 vs. 3Q18 Net Interest Income $3,281 $3,305 $3,251 (0.7) 0.9 Taxable-equivalent Adjustment 25 27 30 (7.4) (16.7) Net Interest Income (taxable-equivalent basis) 3,306 3,332 3,281 (0.8) 0.8 Noninterest Incom
Slide 9: Net Interest Income
Net Interest Income $3,281 $3,332 $3,306 Linked Quarter • Net interest income decreased, primarily driven by the impact of declining rates, the flatter yield curve and lower interest recoveries, partially offset by growth in earning assets and an additional day in the third quarter. • The net intere
Slide 10: Noninterest Income
Noninterest Income Linked Quarter $2,614 • Payment services revenue growth was driven by seasonally higher $2,418 $2,490 corporate payment products sales volume and merchant processing $272 $174 $189 services fee revenue. $415 $421 • Mortgage banking revenue growth reflects higher origination and $4
Slide 11: Noninterest Expense
Noninterest Expense Linked Quarter $3,044 $3,153 $3,144 • Compensation expense increased primarily due to an $247 $270 $277 additional day in the third quarter and variable compensation $270 $281 $279 related to business production. $286 $290 $297 • Employee benefits expense increased primarily due
Slide 12: Capital Position
Capital Position $ in billions 3Q19 2Q19 1Q19 4Q18 3Q18 Total U.S. Bancorp shareholders' equity $53.5 $52.9 $52.1 $51.0 $50.4 Basel III Standardized Approach Common equity tier 1 capital ratio 9.6% 9.5% 9.3% 9.1% 9.0% Tier 1 capital ratio 11.2% 11.0% 10.9% 10.7% 10.6% Total risk-based capital ratio
Slide 13: Digital Engagement Trends
Digital Engagement Trends Transactions (% of Total) 80% 64% 67% 62% Digital Active Customers 60% (% of Total Active Customers)* 38% 36% 40% 33% 80% 72% 70% 20% 67% 0% 60% Three months ended 52% 52% 51% 51% 8/31/17 8/31/18 8/31/19 45% Total Digital Branch, ATM, Phone and IVR 42% 40% Loan Sales (% of
Slide 14: Appendix
Appendix U.S. BANCORP | 14
Slide 15: Average Loans
Average Loans Average Loans ($bn) Key Points Year-over-Year Growth vs. 3Q18 • Average total loans increased by $11.3 billion, or 4.0% 1.2% 1.4% 2.4% 3.8% 4.0% • Average residential mortgage loans increased by $289.2 $292.4 $6.6 billion, or 10.6% $281.1 $283.7 $286.1 • Average commercial loans increa
Slide 16: Average Deposits
Average Deposits Average Deposits ($bn) Key Points Year-over-Year Growth vs. 3Q18 (1.5%) (1.4%) 0.2% 3.1% 6.0% • Average total deposits increased by $19.8 billion, or 6.0% $345.2 $349.9 $330.1 $334.4 $335.4 • Average low-cost deposits (NIB, interest (7.5%) (3.4%) checking, savings and money market)
Slide 17: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q18 2Q19 3Q19 Average Loans $99,048 $103,233 $103,660 0.7% 1.5% 1.4% 1.2% 0.4% 30-89 Delinquencies 0.23% 0.34% 0.43% $100,515 $101,960 $103,233 $103,660 90+ Delinquencies 0.06% 0.26% 0
Slide 18: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics $mm 3Q18 2Q19 3Q19 Linked Quarter Growth Average Loans $39,542 $39,365 $38,990 (0.8%) 1.5% (1.7%) (0.3%) (1.0%) 30-89 Delinquencies 0.08% 0.07% 0.13% 90+ Delinquencies 0.01% 0.00% 0.01% $39,542 $40,1
Slide 19: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q18 2Q19 3Q19 Average Loans $62,042 $66,834 $68,608 2.0% 3.9% 1.7% 1.9% 2.7% 30-89 Delinquencies 0.27% 0.26% 0.24% $66,834 $68,608 $64,476 $65,582 90+ Delinquencies 0.19% 0.1
Slide 20: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q18 2Q19 3Q19 Average Loans $21,774 $22,830 $23,681 2.6% 2.9% 0.9% 1.0% 3.7% 30-89 Delinquencies 1.42% 1.23% 1.33% $22,396 $22,597 $22,830 $23,681 $21,774 90+ Delinquencies 1.18% 1.14
Slide 21: Credit Quality – Home Equity
Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q18 2Q19 3Q19 Average Loans $16,000 $15,831 $15,601 (0.3%) 0.4% (0.4%) (1.0%) (1.5%) 30-89 Delinquencies 0.45% 0.51% 0.55% $16,000 $16,065 $15,993 $15,831 90+ Delinquencies 0.32% 0.34
Slide 22: Credit Quality – Retail Leasing
Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q18 2Q19 3Q19 Average Loans $8,383 $8,547 $8,442 2.9% 1.3% 1.1% (0.5%) (1.2%) 30-89 Delinquencies 0.38% 0.45% 0.48% 90+ Delinquencies 0.02% 0.02% 0.05% $8,383 $8,489 $8,586 $8,547
Slide 23: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q18 2Q19 3Q19 Average Loans $31,520 $32,578 $33,454 0.8% 0.2% 1.1% 2.1 % 2.7% 30-89 Delinquencies 0.83% 0.80% 0.78% $32,578 $33,454 90+ Delinquencies 0.14% 0.13% 0.14% $31,520 $31,58
Slide 24: Credit Quality – Auto Loans
Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q18 2Q19 3Q19 Average Loans $18,563 $19,023 $19,426 (0.2%) (0.3%) 1.8% 1.0% 2.1% 30-89 Delinquencies 1.00% 1.01% 1.04% $18,563 $18,833 $19,023 $19,426 90+ Delinquencies 0.08% 0.09% 0.1
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures (Dollars in Millions, Unaudited) Three Months Ended September 30, June 30, September 30, 2019 2019 2018 Net interest income $3,281 $3,305 $3,251 Taxable-equivalent adjustment (1) 25 27 30 Net interest income, on a taxable-equivalent basis 3,306 3,332 3,281 Net interest in
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended September 30, June 30, September 30, (Dollars in Millions, Unaudited) 2019 2019 2018 Net income applicable to U.S. Bancorp common shareholders $1,821 $1,741 $1,732 Intangibles amortization (net-of-tax) 33 33 32 Net income applicable to U.S. Bancorp comm
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures September 30, June 30, March 31, December 31, September 30, (Dollars in Millions, Unaudited) 2019 2019 2019 2018 2018 Total equity $54,147 $53,540 $52,686 $51,657 $51,007 Preferred stock (5,984) (5,984) (5,984) (5,984) (5,984) Noncontrolling interests (630) (627) (629) (6
Slide 28: U.S. Bancorp 3Q19 Earnings Conference Call
U.S. Bancorp 3Q19 Earnings Conference Call October 16, 2019 U.S. BANCORP