U.s. Bancorp · NYSE:USB
U.s. Bancorp — Investor Day (September 2016)
178 slides from U.s. Bancorp's investor day presentation, Sep 15, 2016
Slide 1: U.S. Bancorp Investor Day 2016
U.S. Bancorp Investor Day 2016 September 15, 2016 Exhibit 99.1
Slide 2: Agenda
Agenda Presentation Speaker Start Time End Time Welcome Jen Thompson 8:30 a.m. 8:35 a.m. Strategic Overview Richard Davis 8:35 a.m. 9:00 a.m. Financial Management Terry Dolan 9:00 a.m. 9:30 a.m. Risk Management Bill Parker and Mark Runkel 9:30 a.m. 10:00 a.m. Innovation and the Customer Experience A
Slide 3: 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 presentations contain forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including
Slide 4: Video: A lot can change in three years
Video A lot can change in three years.
Slide 5: U.S. Bancorp: A Growth Story
U.S. Bancorp: A Growth Story Investor Day 2016
Slide 6: September 2013
September 2013 U.S. BANCORP |
Slide 7: Environment, Industry, Customer
U.S. BANCORP | Environment Industry Customer
Slide 8: Environment
Persistently low rates and flat yield curve Slowly recovering economy Global instability U.S. BANCORP | ENVIRONMENT
Slide 9: Industry
Slow reputation recovery Higher regulatory expectations and costs New market disruptors U.S. BANCORP | INDUSTRY
Slide 10: Customer
U.S. BANCORP | Slowly improving consumer confidence Generational and demographic shifts Life becomes digital CUSTOMER
Slide 11: September 2013 - September 2016
U.S. BANCORP | September 2013 - September 2016
Slide 12: U.S. Bancorp at a glance
U.S. Bancorp NYSE TradedUSB Founded1863 Market Value$75B Market value as of September 8, 2016 Branches3,122 ATMs4,923 Customers18.6M Assets$438B Deposits$318B Loans$269B
Slide 13: Revenue Mix by Business Line
Revenue Mix by Business Line Consumer and Small Business Banking 41% Payment Services 31% Wealth Mgmt and Securities Services 11% Wholesale Banking and Commercial Real Estate 17% FY2015 taxable-equivalent basis Business line revenue percentages exclude Treasury and Corporate Support (see slide 34) B
Slide 14: The Perfect Position
The Perfect Position Source: Company filings as of June 30, 2016; Market value as of September 8, 2016
Slide 15: Industry-leading Results
Q2 2016 results; peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI, USB and WFC ROCE ROA Efficiency ratio USB Rank #1 USB Rank #1 USB Rank #1 Industry-leading Results
Slide 16: Recognized and Awarded
Recognized and Awarded AA Long-term Debt Rating (highest-rated bank globally) – Fitch Ratings, October 2015 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 Most Trusted Com
Slide 17: The past three years have informed the future
The past three years have informed the future Digital payments Employee engagement Brand Innovation Omnichannel Predictive analytics and insights Next Generation Banking Compliance Risk management Market expansion Leadership Revenue Growth Strategy
Slide 18: Strategy
U.S. BANCORP | Strategy
Slide 19: We invest our hearts and minds to power human potential
We invest our hearts and minds to power human potential.
Slide 20: Platform for Growth
Our strategic plan is multi-faceted and challenging, and consistent with our purpose, core values and the discipline that brought us to a position of strength today. Platform for Growth
Slide 21: Investor Day themes 2013 and 2016
Investor Day Most Trusted Choice Building on our competitive advantage Governance Reputation Culture Unified Customer Experience Putting our customers at the center Growing our business strategically Leveraging data and insights Better Every Day Driving efficiency and sustainability Innovation Techn
Slide 22: September 2016 - September 2019
September 2016 - U.S. BANCORP | September 2019
Slide 23: Environment
U.S. BANCORP | ENVIRONMENT Interest rates moderate Economy grows Global instability remains
Slide 24: Industry
U.S. BANCORP | INDUSTRY Reputation continues slow rebound Regulatory bar is set Disruption accelerates
Slide 25: Customer
U.S. BANCORP | CUSTOMER Emergence of cautious optimism Demographic shifts become mainstream Pace of change grows exponentially
Slide 26: Long-term Strategy Performance since 2013 Investor Day
Long-term Strategy Performance since 2013 Investor Day What we said in 2013 How we’ve performed since 2013 Optimal business line mix ü Preferred business mix with acquired portfolios in payments and securities services, exited student loan and HSA businesses Investments generating positive returns ü
Slide 27: Long-term profitability expectations
2013 Long-term Expectations Revised Long-term Expectations Return on Assets 1.60%-1.90% 1.35%-1.65% Return on Equity 16.0%-19.0% 13.5%-16.5% Return on Tangible Common Equity 17.5%-20.0% Efficiency Ratio Low 50s Low 50s Long-term Strategy Long-term profitability expectations Long-term expectations ar
Slide 28: September 2019 Headlines
U.S. BANCORP | September 2019 Headlines What made us great has made us greater Our customers experience “one bank” Technology and innovation drive profitability
Slide 29: Financial Management
Financial Management Investor Day 2016
Slide 30: Agenda
Agenda What we have achieved Growth Efficiency Returns Sustainability Review of U.S. Bank’s performance and positioning Long-term strategic expectations
Slide 31: What We Have Achieved: Growth
What We Have Achieved Growth Net Income ($bn) 1.4% CAGR Earnings Per Share (diluted) 3.6% CAGR Tangible Book Value Per Share Challenging Environment Since 2013 Regulatory Changes Elevated Compliance Costs Reliable Capital Generation Observations Taxable equivalent basis
Slide 32: Growing balance sheet: Loans
What We Have Achieved Growing balance sheet Year-Over-Year Growth ($bn) Average Loans 2Q16 Average Loans $267 billion 2013 Average Loans $227 billion Res Mtg and Home Equity Commercial Commercial Real Estate Credit Card Other Retail Covered 16% growth 10% growth USB Peer Median Peers include: BAC, B
Slide 33: Growing balance sheet: Deposits
What We Have Achieved Growing balance sheet Year-Over-Year Growth ($bn) Average Deposits 2Q16 Average Deposits $307 billion 2013 Average Deposits $250 billion Noninterest bearing Checking and Savings Time 21% growth 11% growth Peer Median USB Peers include: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI, an
Slide 34: Revenue growth
What We Have Achieved Revenue growth Fee Income ($bn) Average Earning Assets and NIM Despite a challenging environment Slow economic growth Persistent low interest rates Yield curve flattening Liquidity (LCR) requirements Revenue growth of 1.8% CAGR $ in billions Fee Income ($bn) Net Interest Income
Slide 35: Efficiency
Strategic business investment NextGen banking/digital delivery Omnichannel Real-time payments Multicultural initiatives Capital markets offerings Wealth Management Client relationship management Brand development Cyber security Elevated compliance costs Industry leading efficiency ratio What We Have
Slide 36: Returns
What We Have Achieved Returns ROE Trend Industry leading profitability Capital efficient business mix Disciplined capital deployment Efficient platform Changing regulatory environment Regulatory capital requirements Compliance costs Liquidity requirements ROTCE - 1Q13 to 2Q16 Average ROE vs Peers -
Slide 37: Sustainability - earnings and capital
Competitive advantages Diversified business mix Operating scale Efficient platform Flight to quality Sustainability of dividends What We Have Achieved Sustainability - earnings and capital Source: Company filings and SNL Financial, Federal Reserve estimates under supervisory severely adverse scenari
Slide 38: Agenda
Agenda What we have achieved Review of U.S. Bank’s performance and positioning Optimal size Diversified business mix Preferred mix of businesses Efficiency as a competitive advantage Funding as a competitive advantage Asset sensitivity and liquidity Capital flexibility Long-term strategic expectatio
Slide 39: Optimal size
Review of U.S. Bank’s Performance and Positioning Optimal size Assets G-SIBs Higher capital standards Higher litigation risk Bail-in debt requirements Supplementary leverage ratio Limited acquisition opportunities Relative cost of compliance Sub-optimal efficiency and scale Less capacity to invest P
Slide 40: Diversified business mix
Revenue Mix by Business Line Consumer and Small Business Banking 41% Payment Services 31% Wealth Mgmt & Securities Services 11% Wholesale Banking 17% Fee Income/Total Revenue Review of U.S. Bank’s Performance and Positioning Diversified business mix Full year 2015, taxable-equivalent basis; Business
Slide 41: Preferred mix of businesses
U.S. Bancorp Revenue Mix Peer Bank Average Revenue Mix Review of U.S. Bank’s Performance and Positioning Preferred mix of businesses Trading, Brokerage, Investment Banking, Equity Investments 3% Full year 2015, taxable-equivalent basis; Business line revenue percentages exclude Treasury and Corporat
Slide 42: Efficiency as a competitive advantage
Review of U.S. Bank’s Performance and Positioning Efficiency as a competitive advantage Source of competitive advantage Efficient platform Single processing platforms Full consolidation of acquisitions Operating scale in all significant businesses Business line monthly review process Capital expendi
Slide 43: Funding as a competitive advantage
Review of U.S. Bank’s Performance and Positioning Funding as a competitive advantage Best-in-Class Debt Ratings Competitive advantages Lower cost of funding Pricing advantage Flight to quality Customer confidence 5-Year Bank Debt Spread to U.S. Treasuries (bps) Holding company, as of September 1, 20
Slide 44: Asset sensitivity and liquidity
Review of U.S. Bank’s Performance and Positioning Asset sensitivity and liquidity Sensitivity Source: Company filings Total Available Liquidity ($bn) Well-balanced position Asset sensitivity Reliable source of core deposits Diversified sources of liquidity Excess cash and liquid assets Wholesale fun
Slide 45: Capital flexibility
Review of U.S. Bank’s Performance and Positioning Capital flexibility Fully Phased-In CET1 Ratio Capital Conservation Buffer Competitive advantages Diversified business mix Lower risk profile PPNR sustainability Capital levels align with: Risk profile Capital generation Returns to shareholders
Slide 46: Agenda
Agenda What we have achieved Review of U.S. Bank’s performance and positioning Long-term strategic expectations
Slide 47: Long-term Strategy Performance since 2013 Investor Day
Long-term Strategy Performance since 2013 Investor Day Source: Company filings and SNL Financial What we said in 2013 How we have performed since 2013 Optimal business line mix ü Preferred business mix with acquired portfolios in payments and securities services, exited student loan and HSA business
Slide 48: 2013 Long-term Expectations vs Actual Performance
2013 Long-term Expectations Actual Performance 2013-2015 Net Interest Income 5-7% 1.8% Fee Income 7-9% 1.8% Revenue 6-8% 1.8% Expense 3-5% 3.1% Provision 6-8% -8.1% Net Income 7-9% 0.4% EPS 8-10% 2.6% Slower economic growth Sustained low interest rates Yield curve flattening Elevated compliance cost
Slide 49: Dividend growth to shareholders
Long-term Strategy Performance since 2013 Investor Day 9.0% CAGR Capacity for dividend growth Quarterly dividend raised to $0.28 per share in 3Q16 9.8% increase in 2016 Dividend growth to shareholders
Slide 50: Long-term expectations
2013 Long-term Expectations Revised Long-term Expectations Net Interest Income 5-7% 5-7% Fee Income 7-9% 6-8% Revenue 6-8% 6-8% Expense 3-5% 3-5% Provision 6-8% 12-18% Net Income 7-9% 6-8% EPS 8-10% 8-10% Long-term Strategy Long-term expectations Business Line Investor Day 2013 Long-term Revenue Gro
Slide 51: Long-term profitability expectations
2013 Long-term Expectations Revised Long-term Expectations Return on Assets 1.60%-1.90% 1.35-1.65% Return on Equity 16.0%-19.0% 13.5-16.5% Return on Tangible Common Equity 17.5-20.0% Efficiency Ratio Low 50s Low 50s 13.5% Long-term expectations are developed assuming: Interest rate increases of 25bp
Slide 52: Capital management
Long-term Strategy Capital management Source: Company filings Earnings Distribution Target (established 2001) Reinvest and acquisitions Dividends Share repurchases 20 – 40 % 30 – 40 % 30 – 40 % Payout Ratio Dividends Share Repurchases 71% 72% 72% 79%
Slide 53: Valuation creation
Long-term Strategy Valuation creation Returns Drive Growth and Valuation Source: FactSet, company filings
Slide 54: Appendix
Appendix
Slide 55: Non-GAAP financial measures
Non-GAAP financial measures Line of business financial performance Taxable-equivalent basis, excluding securities gains (losses) net U.S. BANCORP |
Slide 56: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements. (2) Includes net losses on cash flow hedges included in accumulated other comprehensive income (loss) and other adjustments. (3) Includes
Slide 57: Risk Management
Risk Management Investor Day 2016
Slide 58: Risk Management at U.S. Bancorp
Risk Management at U.S. Bancorp Risk and governance starts at the top Investments in people, processes and technology Infrastructure largely in place and reflected in our run rates I m ple m en t e d a c ollabo r a t i v e “ T h r e e Line s o f De f en s e ” s y s t e m o f c he ck s a n d b a l an
Slide 59: Risk Management Leadership
Risk Management Leadership We have a seasoned leadership team. P.W. (Bill) Parker Business Line Risk Management ~21 years Independent Risk Management ~25 years Chief Risk Officer Risk Management divisions Average years of experience among leadership team Governance and Risk Management ~26 years Embe
Slide 60: 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 Fair and Responsible Banking Military Lending Act and Service Members’ Civil Relief Act People Process S
Slide 61: Operational Risk Management
Operational Risk Management We established an effective program for operational risk Third party risk management Cybersecurity and information technology New and modified products and services Innovation activities Monitoring and verification activities throughout all phases of the lifecycle Indepen
Slide 62: Credit Risk Management
Credit Risk Management
Slide 63: Strong Credit Risk Management Culture
Strong Credit Risk Management Culture Supports and enables prudent long-term growth Enhances position as the most trusted choice Produces consistent, predictable and repeatable results
Slide 64: Consistent Loan Growth
Consistent Loan Growth Maintained balanced and diversified portfolio of wholesale and retail loans Retail 51% Wholesale 49% Wholesale 51% Retail 49% *Includes covered loans
Slide 65: Retail Credit: Residential Mortgage
Retail Credit Portfolio overviews Residential Mortgage 2Q13 2Q16 WA FICO at origination 749 754 WA LTV at origination 71% 70% Residential mortgage: Repositioned post-recession by focusing on prime jumbo mortgages No sub-prime or near-prime real estate originations Restrictive guidelines on interest-
Slide 66: Retail Credit: Home equity
Retail Credit Home equity: Predominantly originated through the branch channel to existing customers for non-purchase money purposes End-of-draw exposure remains low, with only 7% of balances scheduled to begin amortizing within the next 36 months Home Equity 2Q13 2Q16 WA FICO at origination 748 752
Slide 67: Retail Credit: Auto loans
Retail Credit Auto loans: Continued high credit quality originations Refined non-prime indirect auto lending to shift focus to near-prime while eliminating sub-prime Auto Loans 2Q13 2Q16 WA FICO at origination 770 770 Auto Leases 2Q13 2Q16 WA FICO at origination 769 785 Portfolio overviews Auto leas
Slide 68: Retail Credit: Credit cards
Retail Credit Credit cards: Well-diversified portfolio between bank brand and partner/co-brand Credit Cards 2Q13 2Q16 WA FICO at origination 763 758 Private student lending and manufactured housing businesses exited Portfolio overviews
Slide 69: Retail credit enablers
Retail credit enablers U.S. BANCORP | Retail Credit Enablers Leverage technology to improve credit process: Expanding automated decisioning with indirect auto portfolio Testing big data/advanced analytics techniques, such as machine-learning algorithms
Slide 70: Wholesale Credit
Wholesale Credit Strong commercial and industrial origination quality: Diversified industry mix with average credit quality equivalent to BBB- or Baa3 (inv. grade) Stronger credit quality compared to industry’s Shared National Credit (SNC) portfolio Smaller leveraged lending market share Energy expo
Slide 71: Wholesale Credit: Commercial Real Estate
Wholesale Credit Source: FR Y9C reporting. CRE Loans include loans for Construction, Multi-family, and non-owner occupied non-farm non-residential properties. Strong origination quality, diversified by property type and supported by strong guarantors Maintained underwriting discipline in constructio
Slide 72: Wholesale Credit Enablers
Wholesale Credit Enablers Leveraging technology to improve credit process: new Wholesale and Small Business underwriting platforms Client advocacy training for all Wholesale staff to ensure right product at the right time and to deepen relationships by presenting “one” U.S. Bank to the client U.S. B
Slide 73: Strong Credit Culture
Strong Credit Culture Consistent and disciplined underwriting performs better than the industry during times of stress Sources: SNL, Federal Financial Institutions Examination Council (FFIEC) Consolidated Reports of Condition and Income Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI and WFC
Slide 74: Through-the-Cycle Normalized Charge-offs
Investor Day 2Q13 Loan Portfolio Normalized NCO% Commercial 0.45% Commercial Real Estate 0.50% Small Business* 1.75% Residential Mortgages 0.60% Credit Cards 5.00% Other Retail 1.00% Total 1.00% Investor Day 2Q16 Loan Portfolio Normalized NCO% Commercial 0.40% Commercial Real Estate 0.60% Small Busi
Slide 75: Strong Risk Management
Strong Risk Management Financial Crisis-Related Settlement Outlays Since 2010 Strong risk management produces prudent long-term growth with low volatility and consistent, predictable and repeatable results. Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI and WFC Net Charge-off Volatility Since 20
Slide 76: Innovation and the Customer Experience
Innovation and the Customer Experience Investor Day 2016
Slide 77: The way people interact with banks is changing
The way people interact with banks is changing Expectations Data Usage Interaction Omnichannel Customers' expectations for experience are being heavily influenced by all industries, not just banking Increased expectation that data provided to the bank will be used to provide a personalized experienc
Slide 78: Leverage innovation, technology and data for a unified customer experience
To meet those changing demands, we need to leverage innovation, technology and data to truly enable a unified customer experience. Payments Mortgage Wholesale Wealth Small Business Retail U.S. BANCORP |
Slide 79: Our bank-wide efforts touch three main areas
Our bank-wide efforts touch three main areas U.S. BANCORP | Bank-wide culture of innovation Technology and proactive data management Customer-centered insights
Slide 80: Bank-wide culture of innovation
Bank-wide culture of innovation our approach and results are industry-recognized “arguably the single most forward-thinking major financial institution in the United States today,” 2016 #3 for Innovation “arguably built the industry’s deepest innovation department,” 2015 Innovation Award Photo Bill
Slide 81: Building innovation into our DNA
Support emerging technology adoption for current core businesses Identify changes in consumer and business trends Seed long-term opportunities We work across business lines to imagine and develop solutions that solve today’s challenges and open tomorrow’s markets Defend and extend current core busin
Slide 82: Exploring our customer journey
Customer-centered design is core to our approach. Consumer and Small Business co-creates with innovators, product experts, designers and facilitators. Customer journey mapping Elevated “Voice of the Customer” discipline Bank-wide culture of innovation exploring our customer journey: what we deliver
Slide 83: Engaging the FinTech community
Bank-wide culture of innovation engaging the FinTech community We are actively staying at the forefront of innovation and security. Our partnership with Plug and Play, a Silicon Valley innovation platform, keeps us connected to other forward-thinking leaders in financial technology. Bank Innovation
Slide 84: Current innovation topics
Same day ACH Fed real time payments EWS real time P2P Assessment and engagement Partnership with R3 Consortium FinTech engagement Third party data aggregators: risks and strategy Enterprise API strategy Patent strategy Alternative lenders: assessment and response Bank-wide culture of innovation ensu
Slide 85: Expanding core expertise from Payments to the rest of the bank
Bank-wide culture of innovation expanding core expertise from Payments to the rest of the bank Wealth Management Future Advisor We are launching a technology-driven investing and advising solution using phone, chat and email support. Real time P2P We were the first bank in the United States to launc
Slide 86: Customer-centric engineering approach
Bank-wide culture of innovation employing a customer-centric engineering approach to deliver capabilities We are advancing a cloud-based infrastructure to evolve software and enable real-time, data-based decision-making to serve customers Cloud-based infrastructure Secure platform ensures informatio
Slide 87: Leveraging customer-centric engineering to deliver business value
Bank-wide culture of innovation leveraging customer-centric engineering to deliver business value Insert Picture Pivot Co-created with iterative agile approach Transformational client experience Dramatic market share gains Secure document management and compliance Self-service reporting and trade pr
Slide 88: Understanding velocity: machine-speed data analytics
Technology and proactive data management understanding velocity: better every day with machine-speed data analytics 500 information security staff in 28 cities, 6 countries. Dedicated data science, hunting, threat intelligence, 24x7 monitoring teams 20-30% Year-over-year investment growth past 3 yea
Slide 89: Most trusted choice: frictionless controls
Technology and proactive data management most trusted choice: customer-centric, risk-based and frictionless controls Multichannel customer authentication Secure options Frictionless Customer-selected Patent for customer malware detection President’s Advisory Board Ponemon’s “Most Trusted Company” fo
Slide 90: Data-dependent efforts keep us on the leading edge
Technology and proactive data management intensely data-dependent efforts keep us on the leading edge Building a “future-proof” defense through intelligence and analytics Protecting against threats (fraudsters and hackers) and managing through new breakthroughs (disruptive technologies and real-time
Slide 91: 360-degree holistic customer view
Using data to create a 360-degree holistic customer view Implementing CRM to deliver this data to frontline employees Attracting, retaining and engaging top talent Building deep base of customer knowledge Driving insights and analytics into actionable, measurable business outcomes Training and teach
Slide 92: Integrating CRM systems for one holistic customer view
We are integrating our CRM systems to deliver one holistic view of the customer, which enables us to leverage the whole bank CUSTOMER PLATFORM EMPLOYEE Unified customer experience Integrated solution Employee productivity Seamless cross-channel experience, allowing us to bring all of U.S. Bank to th
Slide 93: Reaching the multicultural consumer
94% of new population growth in our retail footprint will come from multicultural consumers >50% of U.S. households will be multicultural by 2050 and will command significant buying power We have a tremendous opportunity to connect with a more diverse audience, leading to higher growth for the compa
Slide 94: Measuring progress with a loyalty metric
Aligned across business lines and products to ensure we are measuring and acting against recent, specific, consistent data Comprised of “Overall Satisfaction,” “Likelihood to Recommend” and “Likelihood to Continue” Proven metrics that connect business results to company growth 25% 7x 43% greater ann
Slide 95: 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 U.S. BANCORP | Product-focused Several approaches to segment and target customers Fragmented initiatives, focused with business lines (e.g.
Slide 96: Next Generation Banking aspiration
Next Generation Banking aspiration: define and deliver a brandable, differentiated consumer experience that delivers personalization and strengthens “relationship” through all touch points Efforts are channel-agnostic and focus initially on consumer banking (retail, small business and wealth), with
Slide 97: We will deliver a Unified Customer Experience
We will deliver a Unified Customer Experience. The Unified Customer Experience strategic initiative puts the customer at the center and will deliver one seamless experience across the entire bank. This effort will require the bank to fundamentally evolve the ways in which we engage, advise and servi
Slide 98: Consumer and Small Business Banking
Consumer and Small Business Banking Investor Day 2016
Slide 99: Consumer and Small Business Banking overview
Consumer and Small Business Banking Business Line Highlights - % of Revenue Our Footprint Key Metrics Delivers products and services through banking offices, telephone servicing and sales, direct mail, ATMs, and online and mobile channels In first half of 2016, net income grew 3.9% YoY to $711M on r
Slide 100: Historical Financial Highlights
Historical Financial Highlights Automobile Loans ($bn) Total Loans ($bn) Total Deposits ($bn) Business Loans ($bn) # of Branches Residential Mortgages ($bn) 3.8% CAGR 6.2% CAGR 4.1% CAGR 7.1% CAGR 5.1% CAGR
Slide 101: Competitive Advantages
Competitive Advantages An Integrated Component of Our Business Private Client Group partnership to bring whole bank to Wealth Management customers Consumer and Small Business Banking Wealth Management and Securities Services Payments Wholesale Banking Branches offer access to Credit Card and Merchan
Slide 102: Our Path to Growth
Our Path to Growth In Consumer and Small Business Banking, we are taking what we know about customers and leveraging the strength of personalized relationships to truly differentiate our delivery model across all channels. U.S. BANCORP |
Slide 103: Consumers still use all channels when they bank
While consumer demographics are changing, people still use all channels when they bank Source: Raddon Financial Group, Spring Survey 2016 Self-reported percentage using channel All Generations Traditionalists Baby Boomers Gen X Millennials Lobby or Drive-up Online Banking Online Bill Payment Mobile
Slide 104: Moving toward segmentation and consumer demands
We are moving beyond demographics toward segmentation and meeting consumer demands Investing Financing Moving money Who (demographics, life stage, behavior, usage) Today CHECKING SAVINGS WEALTH MANAGEMENT CREDIT CARDS LOANS Within a demand space, requirements outline how an offering can meet the nee
Slide 105: Delivery model meets customers how and where they choose
Our delivery model allows us to meet our customers how and where they choose Branch counts include only in-footprint branches that can open accounts as of June 30, 2016 and excludes servicing only branches (e.g. standalone drive-ups). Consumer households only. Virtual channels 6.5 million households
Slide 106: Right-sizing the branch network
We are right-sizing the branch network Large footprint Transaction center Responding to inbound customers Branch manager in the branch Primarily focused on good service through traditional retail activity Adjusted footprint based on need Advice center External customer development Branch manager spe
Slide 107: Aligning to deliver the whole bank
We are aligning to deliver the “whole bank” Our small business strategy is an example of this effort Connected to the community Leveraging technology Client advocacy
Slide 108: Building strong virtual capabilities
We are building strong virtual capabilities to complement our physical sites Virtual Channel Experience Mobile Banking #4 / Top quartile Online Banking #4 / Top quartile Online Account Opening #3 / Top quartile Call Center #2 / Top quintile IVR #2 / Top quartile Sources: Dynatrace Mobile Banking sco
Slide 109: Unified Omnichannel lens
We are viewing our company and customers through a unified, Omnichannel lens All channels comprise “Omnichannel” Online Mobile ATM Telephone Branch The customer Omnichannel strategy How customers interact seamlessly and holistically across the bank Next Generation Banking Call center experience Ente
Slide 110: Next Generation Banking
Next Generation Banking: define and deliver a brandable, differentiated consumer experience that delivers personalization and strengthens “relationship” through all touch points Efforts are channel-agnostic We are assessing efficacy (e.g., branch format, website content, app functions, etc.) and sco
Slide 111: Next Generation: Continuous Improvement
1-month cycle The process Customer-centric rapid reaction Key areas of focus There are common themes Next Generation: Continuous Improvement 1.Customer reports issue 2.CI team read daily and prioritize 3.Solution identified 4.Rapid agile design and delivery 5.Solution delivered
Slide 112: Next Generation: Foundational Capabilities
Next Generation: Foundational Capabilities Projects touch everything from branch experience to content, beginning with reliability, features and transactions Critical reliability Critical features Transaction accuracy/speed Equipping customers with the reliable tools and technology they expect from
Slide 113: Next Generation: Differentiated Experience
Next Generation: Differentiated Experience Segmentation, data and analytics Foundational Capabilities Bill John In common: Age: 45 Income: $150,000 Live: Omaha, NE Experience Experience Kids: None Risk appetite: Aggressive Financial assets: High Preference: Virtual Kids: College Risk appetite: Low F
Slide 114: Relationship Management Enabled by Data
Relationship Management Enabled by Data We will be providing tools to personalize and unify the customer experience universally across all lines and channels Keep the customer at the center to provide Omnichannel experience; establish common definitions of customer, lead, referrals Provide visibilit
Slide 115: Using data to upgrade the experience
We are using data to upgrade the experience Help me achieve my goals Help me manage my day-to-day finances Provide reliable customer service Make working with you simple and efficient Charge fees that are fair and reasonable Give me digital access when, where and how I choose Personalized solutions.
Slide 116: Creating Personalized Customer Experiences
Creating Personalized Customer Experiences I recognize you. I understand you. “There’s no one else quite like you.” “We’ve enjoyed great times together, and I can recall them all like they happened yesterday.” “I wanted to share this financial planning idea. I knew it would have deep meaning for you
Slide 117: The future of Consumer and Small Business
The future of Consumer and Small Business is poised to drive market share, revenue and efficiency powered by a unified customer experience. U.S. BANCORP |
Slide 118: Wholesale Banking
Wholesale Banking Investor Day 2016
Slide 119: Wholesale Banking Key Metrics
Key Metrics Wholesale Banking Revenue Breakdown Revenue Contribution to USB Fixed Income and Capital Markets Net Interest Income - Loans Net Interest Income - Deposits Treasury Management Other Fees Average Loans by Customer Segment Commercial Real Estate Middle Market Leasing and Asset-based Lendin
Slide 120: A Growing and Diversified Customer Base
A Growing and Diversified Customer Base + 120 Flight to Quality 2007-2010 Positioned to Win 2010-2013 Extending the Advantage 2013 - 2Q16 TTM Client Segments Number of Clients Revenue Growth Number of Clients Revenue Growth Number of Clients Revenue Growth Middle Market +10% +18% +12% +19% +14% +23%
Slide 121: Historical Financial Highlights
Historical Financial Highlights Fixed Income and Capital Markets Revenue ($mm) Total Commitments ($bn) 11.6% CAGR Average Loans ($bn) 10.5% CAGR Average Deposits ($bn) 11.5% CAGR 10.0% CAGR
Slide 122: Competitive Advantages
Competitive Advantages Competitive advantages Strong financial performance with optimal size Best-in-class debt ratings making us the counterparty of choice Diverse mix of revenue Effective partnerships across U.S. Bank An integrated component of our business Wholesale Banking Consumer and Small Bus
Slide 123: Capital Markets market rankings
Capital Markets(3) Category Market Rank Commercial Real Estate Bank Lender Bank Products C&I Bank Lender U.S. Investment Grade Loan Bookrunner U.S. Middle Market Loan Bookrunner Commercial Real Estate Loan Bookrunner Investment Grade Domestic Bond Lead and Co-Manager(6) Treasury Management & Purchas
Slide 124: Uniquely Positioned to Gain Market Share
Uniquely Positioned to Gain Market Share U.S. BANCORP | Strong financial performance with optimal size Change in competitive landscape Uptiering client relationships
Slide 125: Strong Financial Performance with Optimal Size
Strong Financial Performance with Optimal Size 1 Superior debt ratings Pricing power Credit products Deposit products Fee products “Favored” counterparty Bolster derivatives and foreign exchange activity Competitor credit rating downgrades create swap novation opportunities Strong balance sheet Capa
Slide 126: Change in Competitive Landscape
Change in Competitive Landscape Competitors are retrenching Global/European Banks are reducing investment banking assets, re-focusing business strategies, exiting markets and scaling back geographic footprints Uptier credit commitments Pursue target list of companies Fill loan syndication gaps Lower
Slide 127: Uptiering Client Relationships
Uptiering Client Relationships 3 Diverse product suite Customer penetration and loyalty Uptiering relationships translates into greater lead opportunities Lead relationships utilize the most products Deeper relationships drive higher revenue per client Increase products per customer Treasury Managem
Slide 128: Under-penetrated debt products create fee opportunity
Under-penetrated debt products create fee opportunity Fee Pool includes the following products: Investment Grade Corporate Bonds, High Yield Corporate Bonds, Preferred Stock, Investment Grade Loans, Leverage Loans, Other Loans and Municipal Negotiated Bonds. Source. Bloomberg, Thomson/LPC, The Bond
Slide 129: Positioned for Continued Growth in Foreign Exchange
Positioned for Continued Growth in Foreign Exchange Foreign Exchange Fee Revenue ($mm) 5.4% CAGR $8.3B fee pool
Slide 130: Positioned for Increases in Corporate Bond Lead Managed Business
Positioned for Increases in Corporate Bond Lead Managed Business Source: Thomson Reuters 2016 Lead Managed Business 2016 Lead & Co-Managed Business “Footprint” “Opportunity”
Slide 131: The Market is Noticing
The Market is Noticing "The firm’s progress in U.S. investment-grade corporate bond underwriting illustrates what it aims to achieve. No bank in the nation’s top 20 for that business has climbed as many rungs as U.S. Bancorp since 2008 without a massive acquisition, according to data compiled by Blo
Slide 132: Uniquely Positioned for Continued Growth
Uptiering client relationships Change in competitive landscape Strong financial performance and optimal size U.S. BANCORP | Uniquely Positioned for Continued Growth
Slide 133: Wealth Management and Securities Services
Wealth Management and Securities Services Investor Day 2016
Slide 134: Wealth Management and Securities Services Revenue Breakdown
Wealth Management and Securities Services Revenue Breakdown ($bn) Net Interest Income Noninterest Income Key Metrics Revenue Contribution to USB Wealth Management and Securities Services Payment Services Consumer and Small Business Banking Wholesale Banking Business Line Highlights - % of Revenue $1
Slide 135: Historical Financial Highlights
Historical Financial Highlights Average Loans ($bn) Average Deposits ($bn) 16.8% CAGR 7.7% CAGR Total Assets under Administration ($tn) 6.5% CAGR Total Assets under Management ($bn) 6.9% CAGR
Slide 136: Track Record of Growth
Track Record of Growth We have experienced strong growth since the financial crisis, driven by organic growth, market segmentation and acquisitions Average Loans, Deposits, AuM and AuA ($bn) Average Loans + Deposits AuM + AuA First Citizens Bank Municipal Trustee and AmeriServ Corporate Trustee Acqu
Slide 137: Competitive Advantages
Competitive Advantages Scale and product breadth Trusted brand Talent management and investment Client experience and segmentation Partnership opportunities European presence Scale/recognition 2013 Share 2016 Share #1 U.S. Municipal Trustee 31% 31% #2 U.S. Corporate Trustee 29% 26% #1 U.S. Structure
Slide 138: Wealth Management
Wealth Management (Sbancorp.
Slide 139: Invested in a Growing Business
Invested in a Growing Business CAGR (2012-2015) Net Interest Income Noninterest Income Income per FTE Pretax income 6% 6% 7% Investment in technology (CAGR) 10% U.S. Bank households (8MM+) introduce Business Banking Mortgage Wholesale Banking Retail Banking Payment Services Other Wealth Management s
Slide 140: Expectations Change with the Environment
Expectations Change with the Environment U.S. BANCORP | Aging and diverse population Massive wealth distribution More competition for talent Immediacy of information Changing environment Distinctive experience Holistic goals-based advice Technology enabled customized solutions Simple access anytime
Slide 141: Bringing the Whole Bank to Affluent Customers
Bringing the Whole Bank to Affluent Customers Goals-based planning to meet financial objectives Comprehensive, unbiased advisory capabilities Collaborative relationship with client Joint books of business and branch coverage Linked goals and compensation Defining characteristics A team-based approac
Slide 142: Extending Auto-Investing to Reach Clients
Extending Auto-Investing to Reach Clients Fully integrated access to Wealth Management services Partnering with client-facing technology platforms Best-thinking content Goals-based planning services Protocols to introduce digital clients to advisors where appropriate FinTech Established institutions
Slide 143: Well Positioned for Regulatory Changes
Well Positioned for Regulatory Changes Short-term plan Regulatory compliance Client segmentation Product rationalization Service standards Long-term benefits Enhanced and defined client experience More scalable platform Improved cost of delivery U.S. BANCORP | Directly impacted by Department of Labo
Slide 144: Growing Introductions through Data Analytics
Growing Introductions through Data Analytics Contribution from Internal Introductions Existing U.S. Bank retail client, revenue pre-introduction to Wealth Management Projected annual revenue after joining Wealth Management >500% increase Average revenue from a Commercial Banking-only relationship Av
Slide 145: Securities Services
Securities Services (Sbancorp.
Slide 146: What We Do
What We Do Global Corporate Trust Services Trustee Administration Agency Bondholders Deal parties Fund management Fund investors Institution management Beneficiaries Fund Services Administration Compliance Accounting Investor services Custody Distribution Treasury management Institutional Trust and
Slide 147: Investments position us for continued growth
Operational scale Client-centric service Technology enhancements Geographic expansion Established position Acquisitions Investments position us for continued growth Investments in technology, people and processes have positioned us for growth U.S. BANCORP |
Slide 148: Global Corporate Trust is building on strengths
Global Corporate Trust is building on strengths Investments Acquisitions Commitment Results Results 21 acquisitions in 23 years Results Capitalized on disruption Built operational scale and barriers to entry Attracted best talent Delivered differentiated experience Established European presence Leve
Slide 149: Fund Services continues to grow
Assets Serviced Fund Services continues to grow Product expansion Acquisitions Industry expertise Technology enhancements U.S. and European presence Market trend Our position Operations outsourcing to address regulatory changes, scale requirements, technology and service expertise Comprehensive serv
Slide 150: Growing and expanding Securities Services
We are growing and expanding Securities Services We’re focused on investment, organic growth and global growth to drive the expansion of Securities Services Technology and innovation European growth strategy Product expansion Leverage scale Improve client experience (web) Expand digital and data Aut
Slide 151: What Is Next?
What Is Next? Technology and innovation Big Data analytics Web portal Auto-investing Expansion and growth Affluent segment Product expansion Securities Services European growth strategy Most Trusted Choice Competitive advantage Market share growth Collaboration and operational scale support continue
Slide 152: Payment Services
Payment Services Investor Day 2016
Slide 153: Payment Services Revenue Breakdown
Payment Services Net Interest Income Credit & Debit Corporate Payments Merchant Processing Other Key Metrics Revenue Contribution to USB Business Line Highlights - % of Revenue Retail Payment Solutions Global Merchant Acquiring Corporate Payment Systems 11% 60% 29% Revenue Breakdown ($bn) $4.7 $4.8
Slide 154: Payments: Three Distinct Businesses
Payments: Three Distinct Businesses The business Key facts Retail Payment Solutions Issues cards: Consumer credit cards Small business credit cards Debit cards Pre-paid cards > 13 million active accounts > 1,400 agent FI partners > 40,000 distribution points Diversified partnership portfolio Corpora
Slide 155: A Growing and Distinct Customer Base
A Growing and Distinct Customer Base Diversified distribution* Retail Payment Solutions Global Merchant Acquiring Corporate Payment Systems *Volume distribution by channels +4.9% +6.3% +5.5% +4.3% Agent Banks 15% 9% 20+ Cobrands USB 76% USB 28% 32% U.S. Based Partners 40% 26% Federal Government Comm
Slide 156: Historical Financial Highlights
Historical Financial Highlights *Constant Currency 2015 Revenue Breakdown 5.8% CAGR Retail Payments Solutions Volume ($bn) 7.2% CAGR Global Merchant Acquiring Volume* ($bn) 8.3% CAGR 7.2% CAGR Fee Income 64%
Slide 157: Track Record of Growth
Track Record of Growth Total Payments Revenue ($bn) Significant Elavon International expansion Established Innovation group Rolled out international processing platform Durbin Amendment Corporate Card expands in Europe with 11 currencies and 33 markets Fidelity acquisition 7.3% CAGR
Slide 158: Competitive Advantages
Competitive Advantages Competitive Advantages Unique singular international processing platform Integrated Payments provider Proven acquisition track record Largest distribution network Flexible partnership model Proven geographic expansion capabilities An Integrated Component of Our Business Commer
Slide 159: Market Forces and Opportunities
Market forces Growth opportunities Market Forces and Opportunities 1 2 3 Leverage distinctive distribution assets Embedded innovation Expand product sets in profitable verticals and markets through leveraging new technologies and value-centric partnerships Continue investing in “digital first” capab
Slide 160: Leveraging Distinctive Distribution Assets
Build upon the strength of our existing partners and capabilities to widen our footprint Extend our competitive advantage by cultivating distribution networks Access to proprietary platforms Flexible deal structures Integration with independent software vendors (ISVs) Specialist sales and support te
Slide 161: Focusing on Digital
Focusing on Digital Acquisition Usage Servicing Extend digital acquisition and leverage partners’ digital capabilities Smart Analytics will integrate and leverage partner data Drive mobile wallet leadership to be everywhere our clients want us to be Scale real-time rewards redemption via mobile to i
Slide 162: Embedding Innovation
Embedding Innovation Virtual payments Automate payments, simplify reconciliation and improve working capital through seamless real-time system integration and mobile capabilities Standardized API Facilitate innovation, drive revenue and speed time to market by providing developers, merchants, client
Slide 163: Preparing for the Future
Preparing for the Future The Payments landscape is changing at an accelerated pace Real-time payments FinTech competition at the edge Technological evolution and increased number of endpoints Focused attention and agility drives our success. With deep domain expertise Digital identity Distributed le
Slide 164: Summary
Summary The growing marketplace across consumer, small business, corporate and government represents an opportunity greater than $10T We are a fiscally disciplined, highly profitable integrated payments player … … with distinct businesses and diversified products, customers and geographies; a breadt
Slide 165: The Value of Brand
The Value of Brand Investor Day 2016
Slide 166: Valuable brands deliver shareholder returns
Valuable brands deliver shareholder returns Top brands outperformed both the S&P 500 and the MSCI World Index Companies that invest in building valuable brands grow their top lines faster; organic topline growth is the greatest determinant of total shareholder return Top Brands S&P 500 MSCI World In
Slide 167: Our past brand value showed room to grow versus peers
Our past brand value showed room to grow when compared to our peers Source: Brand Finance 2016 2016 global ranking U.S. Company 2016 brand value 1 Peer 1 44,170 5 Peer 2 30,603 7 Peer 3 26,928 14 Peer 5 12,946 38 6,293 47 Peer 6 5,513
Slide 168: Brand matters
Brand matters … “Aligning your consumer brand & talent brand”, LinkedIn & Lippincott, 2013; Brand Keys Research Consultancy Companies with strong talent brand attract on average 50% more quality applicants (and have 28% lower turnover rates) 50% 6X Brand loyal customers are six times more likely to:
Slide 169: Building a strong brand yields tangible benefits
Building a strong brand yields tangible benefits Unifies cultures and creates employee pride Helps focus investments, yielding greater efficiency and maximum impact
Slide 170: We set clear goals for our brand efforts
Raise bank reputation Drive consideration Grow revenue Integrate messaging Break through the noise Establish relevancy U.S. BANCORP | We set clear goals for our brand efforts
Slide 171: We built our brand from the inside out
We built our brand from the inside out We invest our hearts and minds to power human potential.
Slide 172: The brand is a million small moments
The brand is a million small moments
Slide 173: Our story is The Power of Possible
Our story is The Power of Possible
Slide 174: We are measuring our progress
We are measuring our progress Consumer Perceptions Lift in impact of advertising Considering those who saw/did not see ads Advertising breakthrough and recall Impact of individual components Changes in perception Business Impacts Incremental revenue by product and business Customer acquisition Retur
Slide 175: Proof: Reputation scores are on the rise
Proof: Reputation scores are on the rise Our brand efforts provided an immediate lift with customers, and we have seen our reputation grow among non-customers. Source: 2016 American Banker Study, Reputation Institute; changes of 3.1 points or fewer are statistically flat vs previous year OVERALL NON
Slide 176: The brand will roll out nationwide
The brand will roll out nationwide
Slide 177: Experience, engagement, stand, relationships, community, product
EXPERIENCE ENGAGEMENT STAND RELATIONSHIPS COMMUNITY PRODUCT U.S. BANCORP |
Slide 178: September 2019 Headlines
U.S. BANCORP | September 2019 Headlines What made us great has made us greater Our customers experience “one bank” Technology and innovation drive profitability