31 slides from U.s. Bancorp's earnings presentation, Jul 19, 2023
Slide 1: U.S. Bancorp 2Q23 Earnings Conference Call
U.S. Bancorp 2Q23 Earnings Conference Call July 19, 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: 2Q23 Highlights
2Q23 Highlights 1 Adjusted for notable items (shown on slide 9) which include merger and integration-related charges, balance sheet optimization activities, and provisions for credit losses related to balance sheet repositioning and capital management actions 2 Non-GAAP; see slide 26 for calculation
Slide 4: 2Q23 Highlights
2Q23 Highlights Income Statement Balance Sheet Credit Quality Capital 1 2Q23 is adjusted for notable items (shown on slide 9) which include balance sheet repositioning and capital management actions, merger and integration-related charges and provisions for credit losses related to balance sheet rep
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 1.15%3 1.07%3 15.7%3 14.6%3 24.3%3 22.3%3 63.2% 63.7% 1 Non-GAAP; see slides 26 and 27 for calculations 2 Net interest margin on a taxable-equivalent
Slide 6: Successful Conversion of Union Bank
Successful Conversion of Union Bank We are now one company with one purpose and shared goals Conversion & integration complete Union Bank deposit accounts transition to U.S. Bank Enrollment in U.S. Bank mobile and online banking Conversion of Trust and Investment Management and card accounts ü ü Sig
Slide 7: Deposit Summary
Deposit Summary Our robust deposit base remains a granular and stable source of funding End of Period Deposit Balance Walk ($B) 3.2% Total Average Deposits ($B) Average Deposits by Business Line1 Strong deposit base driven by diverse mix of consumer / corporate and commercial customers Robust end of
Slide 8: Total Loan Portfolio Mix
Total Loan Portfolio Mix ($B) Prudent Loan Growth Disciplined loan growth focused on high margin / high return business; Commercial Real Estate (CRE) Office exposure remains manageable 1 OO = Owner Occupied 2 SFR = Single Family Residential CRE Exposure Loan growth in commercial, mortgage, and credi
Slide 9: 2Q23 Earnings Summary – Notables
2Q23 Earnings Summary – Notables 2Q23 Notable Items: Balance sheet optimization 2Q23 impacted by balance sheet repositioning and capital management actions Merger & integration charges Charges include the continued impact of merger and integrations costs associated with the Union Bank acquisition Pr
Slide 10: 2Q23 Earnings Summary - Detail
2Q23 Earnings Summary - Detail 1 Adjusted for notable items which include balance sheet repositioning and capital management actions and merger and integration charges 2 Taxable-equivalent basis 3 Non-GAAP; see slide 26 for calculation 3
Slide 11: Net Interest Income
Prior year period comparison impacted by rising rates and the acquisition of Union Bank Net interest income and margin decreased linked quarter as higher deposit pricing was partially offset by the impact of higher rates on earning assets Net Interest Income Net Interest Income (taxable-equivalent b
Slide 12: Noninterest Income
Noninterest income increased over prior year period driven by higher commercial products, payments, and Union Bank impact and core growth in trust & investment management On a linked quarter basis, noninterest income is higher from higher card revenue, merchant processing service revenue, core busin
Slide 13: Noninterest Expense
Noninterest Expense Adjusted expense increased vs. prior year driven by the impact of Union Bank operating expenses, core deposit intangibles, higher compensation, and other noninterest expenses On a linked quarter basis, adjusted expense decreased due to prudent expense management This quarter incl
Slide 14: Credit Quality
Reported 2Q23 Adjusted1 2Q23 Change vs. Adjusted1 Reported 2Q23 Adjusted1 2Q23 1Q23 2Q22 Non-performing Assets Balance ($M) $1,085 $1,085 -$96 $315 NPAs/Period-end Loans plus OREO 0.29% 0.29% -1bps 6bps Net Charge-offs NCOs ($M) $649 $340 $58 $179 NCOs/Avg Loans 0.67% 0.35% 5bps 15bps Amount ($B) Lo
Slide 15: Accelerated Capital Accretion
Accelerated Capital Accretion Ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology 60 basis points of CET1 capital accretion this quarter 2nd Quarter Highlights Solid earnings accretion of ~20bps, net of distribution, ref
Slide 16: Third Quarter / Full Year 2023 Outlook
1 All results and guidance are on an adjusted basis 2 Taxable-equivalent basis 3 Adjusted for notable items (shown on slide 9) which include balance sheet repositioning and capital management actions and merger and integration charges 4 Non-GAAP; see slide 29 for calculation Third Quarter / Full Yea
Slide 17: Enhanced Strength and Stability
CET1 Capital Ratio1 9.1% 2023 CCAR Stress Capital Buffer 2.5% Enhanced Strength and Stability A stronger capital base enhances the strength and stability of U.S. Bancorp, which maintains a highly diverse mix of businesses, strong risk management capabilities, and “through-the-cycle” earnings power R
Slide 18: Appendix
Appendix
Slide 19: Payment Services Fee Revenue Growth
Payment Services Fee Revenue Growth 1 Includes prepaid card Card revenue improved 5.8% YoY driven by sales growth and the Union Bank acquisition Merchant processing fee revenue increased 2.6% YoY driven by sales growth. 2Q YoY growth is lower than prior periods as travel continues to normalize Corpo
Slide 20: Payments Revenue Breakdown
Payments Revenue Breakdown Total payments revenue, which includes net interest income and fee revenue, accounted for 24% of 2Q23 net revenue Total payment revenue grew 5.2% year-over-year due to higher sales volumes across all businesses Seasonal Considerations A Shift to Tech-led3 Revenue Historica
Slide 21: Credit Quality – Commercial
Credit Quality – Commercial Key Statistics $ in millions2Q22 1Q23 2Q23 Average Loans$120,657 $135,683 $138,085 30-89 Delinquencies0.20% 0.33% 0.25% 90+ Delinquencies0.07% 0.05% 0.04% Nonperforming Loans0.12% 0.13% 0.17% Average Loans ($M) and Net Charge-offs Ratio 6.9% 6.5% 3.4% 2.1% 1.8% Linked Qua
Slide 22: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate $ in millions 2Q22 1Q23 2Q23 Average Loans$39,517 $ 55,595$54,934 30-89 Delinquencies0.06% 0.13% 0.13% 90+ Delinquencies0.01% 0.01% 0.00% Nonperforming Loans0.52% 0.97% 0.87% Key Points Average Loans ($M) and Net Charge-offs Ratio Key Statistics Linked Quarter
Slide 23: Credit Quality – Residential Mortgage
1 Credit Quality – Residential Mortgage $ in millions 2Q221Q232Q23 Average Loans$80,228 $116,287$117,606 30-89 Delinquencies0.12%0.13% 0.11% 90+ Delinquencies0.12% 0.08% 0.08% Nonperforming Loans0.27%0.25%0.18% 3.6% 4.7% 15.6% 19.8% 1.1% Key Points Average loans increased by 1.1% on a linked quarter
Slide 24: Credit Quality – Credit Card
Credit Quality – Credit Card $ in millions 2Q221Q232Q23 Average Loans$22,748 $25,569 $26,046 30-89 Delinquencies0.84% 1.10% 1.15% 90+ Delinquencies0.69%1.00% 1.02% Nonperforming Loans - %- %- % Key Points Average loans increased by 1.9% on a linked quarter basis 30-89 and 90+ day delinquencies are u
Slide 25: Credit Quality – Other Retail
Credit Quality – Other Retail $ in millions 2Q221Q232Q23 Average Loans$61,037 $53,316$52,146 30-89 Delinquencies0.39%0.48% 0.50% 90+ Delinquencies0.10%0.12% 0.12% Nonperforming Loans0.24%0.25% 0.27% Key Points Average loans decreased by (2.7%) on a linked quarter basis Net charge-off rate was 0.22%
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1), (2) – see slide 30 for corresponding notes
Slide 27: Non-GAAP Financial Measures
(2), (3) – see slide 30 for corresponding notes Non-GAAP Financial Measures
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures (2) – see slide 30 for corresponding notes
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1), (2), (3) – see slide 30 for corresponding notes
Slide 30: 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 June 30, 2023 included $(22) million of noninterest income related to balance sheet repositioning
Slide 31: us bancorp.
us bancorp.