31 slides from U.s. Bancorp's earnings presentation, Jul 21, 2010
Slide 1: U.S. Bancorp 2Q10 Earnings Conference Call
U.S. Bancorp 2Q10 Earnings Conference Call July 21, 2010 Richard K. Davis Chairman, President and CEO Andy Cecere Vice Chairman and CFO
Slide 2: Forward-looking Statements and Additional Information
2 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
Slide 3: 2Q10 Highlights
2Q10 Highlights Net income of $766 million; $0.45 per diluted common share (includes benefit of $0.05 related to an exchange of perpetual preferred stock for outstanding income trust securities) Record total net revenue of $4.5 billion, up 8.7% vs. 2Q09 Net interest income growth of 14.5% vs. 2Q09 N
Slide 4: Performance Ratios
Performance Ratios 2Q09 3Q09 4Q09 1Q10 2Q10 Return on Avg Common Equity 0.042 0.1 0.096 0.105 0.134 Return on Avg Assets 0.0071 0.009 0.0086 0.0096 0.0109 2Q09 3Q09 4Q09 1Q10 2Q10 Efficiency Ratio 0.51 0.475 0.491 0.49 0.524 Net Interest Margin 0.036 0.0367 0.0383 0.039 0.039 ROCE and ROA Efficiency
Slide 5: Capital Position
Capital Position $ in billions
Slide 6: Loan and Deposit Growth
2Q09 3Q09 4Q09 1Q10 2Q10 Loans 183.9 182 191.6 192.9 191.2 Deposits 163.2 166.4 180.9 182.5 183.3 Loan and Deposit Growth Average Balances Year-Over-Year Growth 2Q10 Acquisition Adjusted Loan Growth = (2.7%) Deposit Growth = 4.1% 8.2% $191.6 3.9% $192.9 4.0% $191.2 12.8% $183.9 9.3% $182.0 25.2% $18
Slide 7: Revenue Growth
Taxable-equivalent basis Revenue Growth Year-Over-Year Growth 9.4% 25.8% 20.8% 11.3% 8.7% $ in millions 2Q09 3Q09 4Q09 1Q10 2Q10 Reported 4159 4250 4376 4321 4519
Slide 8: Credit Quality
3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 NPA $ Change 76 49 155 290 357 489 727 626 386 184 91 -261 NPA % Change 0.13 0.08 0.22 0.34 0.31 0.33 0.37 0.23 0.12 0.05 0.02 -0.07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 NCO $ Change 8 26 68 103 102 134 156 141 112 69
Slide 9: Credit Quality - Reserves
Credit Quality - Reserves 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Allowance 2260 2243 2448 2648 3004 3575 4105 4571 4986 5264 5511 Provision Exceeding NCO's 0 192 200 250 635 530 466 415 278 175 25 Provision/NCO's 1 1.66 1.51 1.5 2 1.67 1.5 1.4 1.25 1.15 1.02 Allowance for Credit Loss
Slide 10: Credit Quality - Credit Card
2Q09 1Q10 2Q10 Average Loans 14,329 16,368 16,329 30-89 Delinquencies 2.38% 2.35% 1.86% 90+ Delinquencies 2.37% 2.57% 2.38% Nonperforming Loans 0.72% 1.02% 1.04% Credit Quality - Credit Card 2Q09 3Q09 4Q09 1Q10 2Q10 Average Loans 14329 15387 16399 16368 16329 Net Charge-offs Ratio 0.0736 0.0699 0.06
Slide 11: Credit Quality - Commercial Real Estate
Multi-Family Retail Res Construction Condo Construction A&D Commercial Office Other Mix 2147 1249 1372 456 1052 943 1339 Investor Owner Mix 14539 11067 Credit Quality - Commercial Real Estate 2Q09 3Q09 4Q09 1Q10 2Q10 Avg Loans 33727 33829 34044 34151 34164 NCO Ratio 0.0144 0.0222 0.0203 0.0228 0.026
Slide 12: Earnings Summary
Earnings Summary $ in millions, except per-share data Taxable-equivalent basis
Slide 13: 2Q10 Results - Key Drivers
2Q10 Results - Key Drivers vs. 2Q09 Net Revenue growth of 8.7% (8.0% excluding significant items) Net interest income growth of 14.5%; net interest margin of 3.90% vs. 3.60% Noninterest income growth of 2.7% (1.4% excluding significant items) Significant items: net change of $26 million Noninterest
Slide 14: Significant Items
Significant Items $ in millions * Does not change net income, but is a component of the computation of earnings per diluted common share
Slide 15: Net Interest Income
Net Interest Income 2Q09 3Q09 4Q09 1Q10 2Q10 Net Interest Income 2104 2157 2360 2403 2409 Net Interest Margin 0.036 0.0367 0.0383 0.039 0.039 Net Interest Income Key Points $ in millions Taxable-equivalent basis vs. 2Q09 Average earning assets grew by $13.2 billion, or 5.6% (0.1% excluding acquisiti
Slide 16: Average Loans
Average Loans 2Q09 3Q09 4Q09 1Q10 2Q10 Covered 10.701 10.288 18.504 21.415 20.454 Commercial 54.059 51.222 49.979 47.282 46.34 CRE 33.727 33.829 34.044 34.151 34.164 Res Mtg 23.964 24.405 25.621 26.408 26.821 Retail 61.427 62.224 63.5 63.622 63.382 Average Loans Key Points $ in billions Year-Over-Ye
Slide 17: Average Deposits
Average Deposits 2Q09 3Q09 4Q09 1Q10 2Q10 Time 48.911 43.951 45.774 45.606 43.607 Money Market 27.25 33.387 38.485 40.902 40.256 Checking & Savings 49.671 52.042 55.64 58.023 59.538 Noninterest-bearing 37.388 36.982 40.99 38 39.917 Average Deposits Key Points $ in billions Year-Over-Year Growth 20.2
Slide 18: Noninterest Income
Noninterest Income 2Q09 3Q09 4Q09 1Q10 2Q10 All Other 346 379 400 392 492 Mortgage 308 276 218 200 243 Service Charges 392 397 370 344 344 Trust & Inv Mgmt 304 293 277 264 267 Payment Services 705 748 751 718 764 Noninterest Income Key Points $ in millions Year-Over-Year Growth 8.6% 48.2% 37.8% 7.3%
Slide 19: Noninterest Expense
Noninterest Expense 2Q09 3Q09 4Q09 1Q10 2Q10 All Other 649 500 611 491 613 Tech & Communications 157 175 186 185 186 Prof Svcs, Marketing and PPS 211 272 256 192 234 Occupancy & Equip 208 203 214 227 226 Compensation & Benefits 904 903 961 1041 1118 Noninterest Expense Key Points $ in millions Year-
Slide 20: Regulatory / Legislative
Regulatory / Legislative Existing Regulatory / Legislative oversight actions 1H10 2H10 FY 2010 Actual Estimate Estimate Overdraft Legislation ^ $60 ^ $170 - $220 ^ $230 - $280 Pricing and Policy Changes Card Act ^ $50 ^ $120 - $140 ^ $170 - $190 Net Interest Margin and Fee Income $ in millions, esti
Slide 21: Regulatory / Legislative - Dodd-Frank Act
Regulatory / Legislative Dodd-Frank Wall Street Reform and Consumer Protection Act Direct Impact Trust Preferred (Collins Amendment) - ^ 140bp reduction to Tier 1 Ratio Deposit Insurance Expense - ^ $200 million increase for 2011 Interchange Fees (Durbin Amendment) - TBD Specifics to be Determined -
Slide 22: Positioned for Growth Opportunities
Positioned for Growth Opportunities Core businesses continue to perform strongly Solid capital and liquidity position and strong capital generation Positioned to capitalize on economic recovery "Flight to Quality" Investing for growth - organic initiatives, M&A and joint ventures USB prepared to opp
Slide 23: Appendix
2Q10 Earnings Conference Call LI Appendix (Sbancorp.
Slide 24: Credit Quality - Commercial Loans
Credit Quality - Commercial Loans 2Q09 3Q09 4Q09 1Q10 2Q10 Average Loans 47362 44655 43490 40837 40095 Net Charge-offs Ratio 0.015 0.0178 0.0228 0.0241 0.0223 Average Loans and Net Charge-offs Ratios Key Statistics Comments Commercial utilization declined slightly resulting in a $500 million decreas
Slide 25: Credit Quality - Commercial Leases
Credit Quality - Commercial Leases 2Q09 3Q09 4Q09 1Q10 2Q10 Average Loans 6697 6567 6489 6445 6245 Net Charge-offs Ratio 0.0329 0.0266 0.0202 0.0214 0.0141 Average Loans and Net Charge-offs Ratios Key Statistics Comments Overall delinquencies continued to improve along with a significant reduction i
Slide 26: Credit Quality - Residential Mortgage
2Q09 3Q09 4Q09 1Q10 2Q10 Restructured 1289 1338 1354 1560 1672 Credit Quality - Residential Mortgage 2Q09 3Q09 4Q09 1Q10 2Q10 Average Loans 23964 24405 25621 26408 26821 Net Charge-offs Ratio 0.0194 0.021 0.0237 0.0223 0.0206 Average Loans and Net Charge-offs Ratios Key Statistics Comments Successfu
Slide 27: Credit Quality - Home Equity
Credit Quality - Home Equity 2Q09 3Q09 4Q09 1Q10 2Q10 Average Loans 19314 19368 19444 19402 19332 Net Charge-offs Ratio 0.0172 0.0182 0.0196 0.0188 0.0164 Average Loans and Net Charge-offs Ratios Key Statistics Comments Strong credit quality portfolio (weighted average FICO 746, CLTV 73%) originated
Slide 28: Credit Quality - Retail Leasing
Credit Quality - Retail Leasing 2Q09 3Q09 4Q09 1Q10 2Q10 Average Loans 5031 4822 4620 4509 4364 Net Charge-offs Ratio 0.008 0.0066 0.0043 0.0045 0.0037 Average Loans and Net Charge-offs Ratios Key Statistics Comments Retail leasing net charge-offs and delinquency rates continue to improve Strong use
Slide 29: Credit Quality - Other Retail
Credit Quality - Other Retail 2Q09 3Q09 4Q09 1Q10 2Q10 Average Loans 22753 22647 23037 23343 23357 Net Charge-offs Ratio 0.018 0.0194 0.0191 0.0193 0.017 Average Loans and Net Charge-offs Ratios Key Statistics Comments Net charge-offs and delinquencies declined on a linked quarter basis Auto loan po
Slide 30: Non-Regulatory Capital Ratios
Non-Regulatory Capital Ratios $ in millions
Slide 31: U.S. Bancorp 2Q10 Earnings Conference Call
U.S. Bancorp 2Q10 Earnings Conference Call July 21, 2010