U.s. Bancorp · NYSE:USB
U.s. Bancorp — BancAnalysts Association of Boston Conference 2016
35 slides from U.s. Bancorp's conference presentation, Nov 4, 2016
Slide 1: BancAnalysts Association of Boston Conference
Exhibit 99.1 BancAnalysts Association of Boston Conference Terry Dolan, Vice Chairman and CFO Bill Parker Vice Chairman and CRO November 4, 2016
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: U.S. Bancorp
U.S. Bancorp NYSE Traded USB Branches 3,114 Assets $454B Founded 1863 ATMs 4,875 Deposits $335B Market Value $76B Customers 18.6M Loans $271B Market value as of October 28, 2016 U.S. BANCORP | 3
Slide 4: Optimal Business Mix
Optimal Business Mix Revenue Mix by Business Line Payment Services • Balanced mix of fee revenue and 31% balance sheet businesses Wealth Mgmt and Securities Services • High return/capital efficient businesses 12% (Payments, Wealth Management) Consumer and Small Business Banking Wholesale 40% Banking
Slide 5: Optimal Revenue Mix
Optimal Revenue Mix U.S. Bancorp Peer Bank Average Revenue Mix Revenue Mix Trading, Brokerage, Trading, Brokerage, Investment Banking, Mortgage Investment Banking, Equity Equity Investments Service Fees Investments 3% 13% Charges 5% Fiduciary 6% Mortgage Activities Fees 5% 4% Other Fee Other Fee Inc
Slide 6: Consumer and Small Business Banking
Consumer and Small Business Banking An Integrated Component of our Business Scale in Key Businesses Rank Branches Wealth Private Client Group offer access Management partnership to bring • Branch Network (25-state footprint) #4 Payments whole bank to to credit card and and Securities • In-store/Onsi
Slide 7: Wholesale Banking
Wholesale Banking An Integrated Component of our Business Competitive Advantages Corporate Wholesale Banking payments Consumer and Treasury Management • Strong financial performance with optimal size Payments Small Business products offered to solutions offered Banking • Best-in-class debt ratings m
Slide 8: Wealth Management and Securities Services
Wealth Management and Securities Services An Integrated Component of our Business Competitive Advantages Offers credit Introduction of Wealth cards, corporate Consumer and Management services to • Scale and product breadth Payments Small Business Consumer and Small payments and Banking • Trusted bra
Slide 9: Payment Services
Payment Services An Integrated Component of our Business Competitive Advantages Offers Private Wealth Offers credit, debit and Client credit and Management Consumer and prepaid cards through • Unique singular international processing platform Small Business retail distribution debit cards and Securi
Slide 10: What We Have Achieved: A growing balance sheet (loans)
What We Have Achieved A growing balance sheet Average Loans Year-over-Year Growth ($bn) 2013 Average Loans 3Q16 Average Loans 5.6% 6.3% 3.6% 7.6% $227 billion $270 billion 4% 2% 14% 13% $269.6 30% 8% 34% 7% $250.5 $241.7 28% 17% 27% 16% $227.5 Commercial CRE USB 17% growth Res Mtg and Home Equity 20
Slide 11: What We Have Achieved: A growing balance sheet (deposits)
What We Have Achieved A growing balance sheet Average Deposits Year-over-Year Growth ($bn) 2013 Average Deposits 3Q16 Average Deposits 6.3% 6.5% 7.7% 10.0% $250 billion $319 billion $318.5 10% 18% 28% 26% $287.2 $266.6 54% 64% $250.5 Noninterest bearing Checking and Savings USB 25% growth Time 2013
Slide 12: What We Have Achieved: Earnings and book value growth
What We Have Achieved Earnings and book value growth Net Income ($bn) Observations 1.4% CAGR • Challenging environment since 2013 $5.8 $5.9 $5.9 $5.6 • Regulatory changes • Elevated compliance costs • Reliable capital generation 2012 2013 2014 2015 Earnings Per Share (diluted) Tangible Book Value Pe
Slide 13: What We Have Achieved: Industry-leading returns
What We Have Achieved Industry-leading returns ROE vs Peers - 1Q13 to 3Q16 Average 14.5% 12.9% ROE Trend 11.1% 9.8% 9.6% 15.8% 8.6% 8.2% 14.7% 14.0% 7.7% 13.4% 6.8% 4.7% USB Peer 9 Peer 3 Peer 6 Peer 4 Peer 2 Peer 5 Peer 8 Peer 7 Peer 1 ROA vs Peers - 1Q13 to 3Q16 Average 2013 2014 2015 3Q16YTD 1.50
Slide 14: Performance and Positioning: Efficiency as a competitive advantage
Performance and Positioning Efficiency as a competitive advantage Source of competitive advantage • Single processing platforms Efficient • Full consolidation of acquisitions platform • Operating scale in all significant businesses Efficiency Ratio 76.3% • Business line monthly review process 1Q13 t
Slide 15: Performance and Positioning: Funding as a competitive advantage
Performance and Positioning Funding as a competitive advantage Best-in-Class Debt Ratings Holding Moody's S&P Fitch DBRS Company Rating Outlook Rating Outlook Rating Outlook Rating Outlook USB A1 s A+ s AA s AA s WFC A2 s A on AA- on AA s BBT A2 s A- s A+ s A (high) s JPM A3 s A- s A+ s A (high) op
Slide 16: Performance and Positioning: Asset sensitivity and liquidity
Performance and Positioning Asset sensitivity and liquidity Sensitivity Well-balanced position 4.00% • Asset sensitivity • Reliable source of core deposits • Diversified sources of liquidity 3.00% 2.91 % 2.69 % • Excess cash and liquid assets • Wholesale funding sources • Off-balance sheet capacity
Slide 17: Performance and Positioning: Capital flexibility
Performance and Positioning Capital flexibility Fully Phased-In CET1 Ratio Competitive advantages 9.3% • Diversified business mix 8.5% • Lower risk profile Internal 1.5% Buffer • PPNR sustainability Capital 2.5% Conservation Capital levels align with Buffer • Risk profile • Capital generation Minimu
Slide 18: Bank-wide Culture of Innovation
Bank-wide Culture of Innovation We work across business lines to imagine and develop solutions that solve today’s challenges and open tomorrow’s markets HORIZON 3 • Support emerging technology adoption for HORIZON 2 current core businesses HORIZON 1 Create Build options for • Identify changes in mom
Slide 19: Summarizing Our Foundational Efforts
Summarizing Our Foundational Efforts Our unified customer experience efforts impact how we work, think and mobilize around the customer at U.S. Bancorp FROM TO Product-focused Customer-centric Several approaches to segment Bank-wide segmentation model and target customers Fragmented initiatives, foc
Slide 20: Our Next Generation Banking Initiative
Our Next Generation Banking Initiative Next Generation Banking aspiration: Define and deliver a brandable, differentiated consumer experience that delivers personalization and strengthens relationships through all touch points • Efforts are channel-agnostic and focus initially on consumer banking (r
Slide 21: Bank-wide Culture of Innovation
Bank-wide Culture of Innovation Expanding core expertise from Payments to the rest of the bank Wealth Management Future Advisor Real time P2P We are launching a technology-driven We were the first bank in the investing and advising solution using United States to launch phone, chat and email support
Slide 22: Risk Management at U.S. Bancorp
Risk Management at U.S. Bancorp Risk and governance starts at the top The Risk Management Committee of the Board of Directors approves and oversees the risk management framework and risk appetite statement Investments in people, processes and technology Implemented a collaborative“Three Lines of Def
Slide 23: Consumer Compliance
Consumer Compliance Significant investments were made to meet exacting “zero defect” standards for consumer compliance Residential Mortgage Default Management Flood Disaster Protection Compliance People Process Systems Fair and Responsible Banking • Leadership, • Quality must be • Automation is tech
Slide 24: Operational Risk Management
Operational Risk Management We established an effective program for operational risk Cybersecurity and New and modified Third party risk Innovation information products and management activities technology services Monitoring and Independent risk Comprehensive Customized verification activities mana
Slide 25: Strong Credit Culture
Strong Credit Culture Consistent and disciplined underwriting performs better than the industry during times of stress Net Charge-Off Ratios 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% USB Normalized Estimate 0.95% to 1.00% 1.0% 0.5% 0.0% 2002 2004 2006 2008 2010 2012 2014 2016 Year Recession Indicator NCO Rate f
Slide 26: Through-the-Cycle Normalized Charge-offs
Through-the-Cycle Normalized Charge-offs U.S. Bancorp Normalized (95-100 bps) Investor Day 2Q13 Investor Day 2Q16 Normalized Normalized Loan Portfolio NCO% Loan Portfolio NCO% Updated through-the-cycle analysis Commercial 0.45% Commercial 0.40% Commercial Real Estate 0.50% Commercial Real Estate 0.6
Slide 27: Risk Management
Risk Management Strong risk management produces prudent long-term growth with low volatility and consistent, predictable, repeatable results Financial Crisis-Related Settlement Outlays Since 2010 Net Charge-off Volatility Since 2003 100 8% 80.1 7% 80 6% 5% 60 4% 40.7 40 3% 2% 17.4 20 11.5 1% 8.0 7.1
Slide 28: We Built Our Brand From the Inside Out
We Built Our Brand From the Inside Out Brand Drives Loyalty Brand Drives Growth We invest our hearts and minds to power human potential. U.S. BANCORP | 28
Slide 29: Recognized and Awarded
Recognized and Awarded • AA Long-term Debt Rating (highest-rated bank globally) – Fitch Ratings, October 2016 • Top 10 World’s Most Admired Companies – Fortune, February 2016 – Quality of management – Value as long-term investment – Soundness of financial position – Wise use of corporate assets • Mo
Slide 30: 2016 Investor Day recap
2016 Investor Day recap Our commitment to serving our customers drives growth. Highlights Key takeaways • Strategic overview • We engage in disciplined strategic planning to generate growth in each of our diversified businesses. • Financial management • We remain well-positioned to deliver consisten
Slide 31: 3Q16 Earnings Summary
3Q16 Earnings Summary • Net income of $1.5 billion; $0.84 per diluted common share • Average loans grew 1.1% vs. 2Q16 • Average deposits grew 3.6% vs. 2Q16 and 10.0% vs. 3Q15 • Net interest income grew 1.6%* vs. 2Q16 and 4.3%* vs. 3Q15 – Average earning assets increased 2.2% vs. 2Q16 • Noninterest i
Slide 32: 4Q16 Outlook (Linked quarter)
4Q16 Outlook (Linked quarter) • Average loan growth in the range of 1.0% to 1.5% linked quarter – Mortgage loan growth expected to slow in line with industrywide tapering of refinancing activity and due to seasonality – Expect rebound in commercial loan growth – Expect strength in consumer loans to
Slide 33: Appendix
Appendix
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures September 30, June 30, March 31, December 31, September 30, (Dollars in Millions, Unaudited) 2016 2016 2016 2015 2015 Total equity $48,399 $48,029 $47,393 $46,817 $45,767 Preferred stock (5,501) (5,501) (5,501) (5,501) (4,756) Noncontrolling interests (640) (639) (638) (6
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures $ in millions Revenue Line of Business Financial Performance 3Q16 YTD Wholesale Banking and Commercial Real Estate $ 2,314 Consumer and Small Business Banking 5,432 Wealth Management and Securities Services 1,557 Payment Services 4,229 Treasury and Corporate Support 2,341
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