U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q4 2022 Earnings Presentation
34 slides from U.s. Bancorp's earnings presentation, Jan 25, 2023
Slide 1: U.S. Bancorp 4Q22 Earnings Conference Call
U.S. Bancorp 4Q22 Earnings Conference Call January 25, 2023 Exhibit 99.2
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: 4Q22 Highlights
4Q22 Highlights Successful Acquisition of Union Bank Closed transaction December 1st; Conversion expected over Memorial Day weekend Positive operating leverage of 230bps1,2,3 Strong financial performance Solid pre-provision earnings growth as adjusted for notable items1, driven by net interest incom
Slide 4: 4Q22 Highlights
4Q22 Highlights 1 Adjusted for notable items (shown on slide 8) which include acquisition impacts related to balance sheet optimization, merger & integration charges, and provision for credit losses 2 Non-GAAP; see slides 29 to 32 for calculations 3Taxable-equivalent basis; see slide 29 for calculat
Slide 5: 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 29 and 30 for calculations 2 Net interest margin on a taxable-equivalent basis 3 Non-GAAP; see slides 29 and 30 for calculatio
Slide 6: Bolstering Our Scale with Union
Bolstering Our Scale with Union Union Bank Added: Consumer Accounts ~1 Million Assets1 Deposits1 Loans1 Business Banking Clients ~190,000 Commercial Relationships ~700 High Net Worth / Affluent Households ~50,000 Branches Bolstering our California Market Share: California deposit market share is now
Slide 7: 4Q22 Earnings Summary – Key Notable Items
4Q22 Earnings Summary – Key Notable Items Balance sheet optimization Sale of acquired loans not aligned with credit risk profile, repositioning of the investment portfolio and sale of certain equity investments Losses related to interest rate hedging positions to minimize impact of interest rate vol
Slide 8: 4Q22 Earnings Summary - Detail
4Q22 Earnings Summary - Detail + = Union Bank contributed $302 million of revenue and $0.03 earnings per share Noninterest expense includes $42 million of intangibles amortization related to Union Bank 1 Adjusted for notable items which include acquisition impacts related to balance sheet optimizati
Slide 9: End of Period Loan Composition
End of Period Loan Composition Total 4Q22 Loan Balance Activity Legacy Combined $ in billions 1 Mark-to-market purchase accounting adjustments
Slide 10: End of Period Deposit Composition
End of Period Deposit Composition Total 4Q22 Deposit Balance Activity Legacy Combined $ in billions 1 Mark-to-market purchase accounting adjustments
Slide 11: End of Period Securities Portfolio Composition
End of Period Securities Portfolio Composition1 Total 4Q22 Investment Securities Activity Legacy Combined $ in billions 1 Balances on an amortized cost basis which excludes unrealized gains (losses) 2 Mark-to-market purchase accounting adjustments
Slide 12: Net Revenue Highlights
Net Revenue Highlights Net interest income increased over prior year for the legacy Company primarily due to the impact of rising interest rates on earning assets and solid loan growth Legacy adjusted noninterest income is lower vs. prior year driven by lower mortgage banking revenue and service cha
Slide 13: Noninterest Expense Highlights
Noninterest Expense Highlights Legacy adjusted expense increased vs. prior year driven by compensation and other noninterest expense. Higher compensation was due to merit and hiring and lower capitalized loan costs. Other noninterest expense increased due to future delivery exposures liabilities and
Slide 14: Credit Quality
Credit Quality $ in millions, except allowance for credit losses in billions 1 Non-GAAP; see slide 30 for calculations; combined NCO, adjusted excludes acquisition impacts and balance sheet optimization one-time items 2 Provision includes $26 million Union Bank contribution (post LD1 impact); Adjust
Slide 15: CET1 Waterfall (3Q22 - 4Q22)
Ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology CET1 Waterfall (3Q22 - 4Q22) Acquisition and Notable impacts primarily include: An increase to goodwill & intangibles including impact of credit and interest rate marks
Slide 16: Union Bank Acquisition Metrics - Update
Union Bank Acquisition Metrics - Update Transaction total value $8 billion $7.5 billion Earnings per share accretion ~6% (75% cost synergies)1 ~8% (100% cost synergies)1 ~8-9% (35% cost synergies)2 low double digits (100% cost synergies)2 Cost Synergies ~$900 million 25% (2022) / 75% (2023) / 100% t
Slide 17: Union Bank Acquisition Metrics - Update
Union Bank Acquisition Metrics - Update (1) Excludes ACL related to loans that were previously charged off by Union Bank (2) Primarily includes interest rate marks for loans held for investment, securities (net of sales), and debt Closing Announcement Allowance for Credit Losses PCD Allowance for Cr
Slide 18: First Quarter / Full Year 2023 Outlook
1 All results and guidance are for Combined Company, adjusted 2 Taxable-equivalent basis 3 Adjusted for notable items (shown on slide 8) which include acquisition impacts related to balance sheet optimization, merger & integration charges, and provision for credit losses 4 Non-GAAP; see slide 30 for
Slide 19: Appendix
Appendix
Slide 20: Average Loans
Average Loans On a linked quarter basis, total loans were higher primarily due to the impact of the Union Bank acquisition as well as legacy portfolio growth. Increases in commercial loans, total commercial real estate and residential mortgages were primarily driven by the Union Bank acquisition, wh
Slide 21: Average Deposits
Average Deposits On a linked quarter basis, deposits increased primarily driven by the acquisition, partially offset by lower time deposits mainly within Corporate and Commercial Banking. Changes in time deposits are primarily related to those deposits managed as an alternative to other funding sour
Slide 22: Payment Services Fee Revenue Growth
Payment Services Fee Revenue Growth 1 Includes prepaid card Card revenue improved 0.5% YoY; higher card volume largely offset by lower prepaid activity Merchant processing fee revenue increased 5.5% YoY; negatively impacted by FX exchange rates; excluding FX, YoY growth was 11.2% Corporate Payments
Slide 23: Payments Revenue Breakdown
Payments Revenue Breakdown Merchant Processing Card1 Corporate Payments All Other Revenue Total payments revenue, which includes net interest income and fee revenue, accounted for 25% of 4Q22 net revenue Total payment fee revenue grew nearly 5.0% year-over-year due to higher sales volumes across all
Slide 24: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Key Points $ in millions4Q21 3Q22 4Q22 Average Loans$104,508 $128,519 $132,918 30-89 Delinquencies0.47% 0.25% 0.26% 90+ Delinquencies0.04% 0.03% 0.07% Nonperforming Loans0.16% 0.09% 0.12% 2.6% 8.0% 6.9% 6.5 % 3.
Slide 25: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate $ in millions 4Q21 3Q22 4Q22 Average Loans$38,851 $ 40,010$45,722 30-89 Delinquencies0.20% 0.02% 0.16% 90+ Delinquencies0.03% 0.05% 0.01% Nonperforming Loans0.73% 0.41% 0.61% Linked Quarter Growth (0.2%) 0.6% 1.1% 1.2% 14.3% Average loans increased by 14.3% on
Slide 26: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage $ in millions 4Q213Q224Q22 Average Loans$75,858 $84,018$97,092 30-89 Delinquencies0.15%0.10% 0.17% 90+ Delinquencies0.24% 0.10% 0.08% Nonperforming Loans0.30%0.24%0.28% 2.4% 2.1% 3.6% 4.7% 15.6% Key Points Average loans increased by 15.6% on a linked quarter bas
Slide 27: Credit Quality – Credit Card
Credit Quality – Credit Card $ in millions 4Q213Q224Q22 Average Loans$22,399 $24,105 $25,173 30-89 Delinquencies0.86% 0.97% 1.08% 90+ Delinquencies0.73%0.74% 0.88% Nonperforming Loans - %- %- % 2.3% (2.5%) 4.1% 6.0% 4.4% Key Points Linked Quarter Growth Average loans increased by 4.4% on a linked qu
Slide 28: Credit Quality – Other Retail
Credit Quality – Other Retail $ in millions 4Q213Q224Q22 Average Loans$61,139 $60,126$58,906 30-89 Delinquencies0.44%0.41% 0.56% 90+ Delinquencies0.11%0.11% 0.12% Nonperforming Loans0.24%0.22% 0.25% 1.9% 1.0% (1.2%) (1.5%) (2.0%) Key Points Linked Quarter Growth Average loans decreased by (2.0%) on
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1), (2) – see slide 33 for corresponding notes
Slide 30: Non-GAAP Financial Measures
(1), (2), (3) – see slide 33 for corresponding notes Non-GAAP Financial Measures
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures * Preliminary data. Subject to change prior to filings with applicable regulatory agencies. (3), (4), (5) – see slide 33 for corresponding notes
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1), (2) – see slide 33 for corresponding notes
Slide 33: 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 December 31, 2022 include the following: $399 million ($297 million net-of-tax) of losses primaril
Slide 34: us bank
us bank